ANZ Group Holdings Ltd (ASX: ANZ) shares trade on the lowest price-to-earnings (P/E) ratio among the big four banks. Yet, shares in the 189-year-old financial institution are struggling to win favour among investors.
The ANZ share price remains under pressure on Thursday as fallout from allegations of manipulation begins to appear. Unfortunately for ANZ shareholders, neither today's move nor recent news is music to their ears as the corporate watchdog continues to dig.
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ASIC and Aussie Government want answers
As it has been reported for a while now, ANZ is the subject of an investigation being conducted by the Australian Securities and Investment Commission (ASIC).
The probe relates to a trade that took place approximately 15 months ago, where ANZ is suspected of market manipulation in a $14 billion bond deal it handled for the Australian federal government.
Eyebrows were raised over an odd series of events during a relatively routine bond issuance on behalf of the federal government. ANZ traders were tasked as the 'risk managers', a key role in executing government bond sales.
However, shortly after the market price was referenced to set the rate for Australia's debt, it quickly changed. The interest rate on the government's debt would be locked in at 3.635%, higher than what was available mere moments later, potentially costing taxpayers tens of millions more in the process.
ASIC and the Australian Office of Financial Management (AOFM) want to know if ANZ was involved.
For now, the corporate watchdog is sniffing around to find out. Meanwhile, it appears the AOFM has shunned ANZ to the sidelines until the outcome is determined. The bank at the centre of the suspicion has been absent from government bond sales since.
ANZ CEO Shayne Elliott described the situation to 6PR Perth on Monday, saying:
[…] When we do those deals, there's always a review with our regulators. There was some unusual activity in the market at the time, so they've come and said, 'Hey, ANZ, please explain.'
We've employed our own investigators. Early days, it is early days. From what we've seen to date, we don't see any wrongdoing on ANZ's part. But if there is, there will be consequences.
What's moving ANZ shares today?
An update this morning has shed some light on the progress of ANZ's own investigation into the bond transaction and data reporting issues previously acknowledged by the bank.
On the latter, ANZ described the submission of incorrect monthly turnover data to the AOFM as an 'unacceptable failure'. The company is now assessing whether it should have made the error known to ASIC sooner than it did.
Secondly, ANZ said it was 'cooperating fully' with ASIC's investigation, which may take months. However, the bank maintains it has not found any evidence of market manipulation during the 10-year government bond sale.
Despite no evidence of misconduct, several employees have been suspended, terminated, and formally warned, including a management reshuffle within the Sydney dealing room that handled the $14 billion bond issuance.
ANZ shares are down 0.73% to $29.28 this morning.
