For ANZ, chief executive Shayne Elliott, the incentive is clear: he needs to prevent the story of the bank’s Treasury trades from blowing up.
Image: Fiona Bianchinotti.
“The Australian Financial Review revealed ASIC’s investigation into ANZ’s trading in $14 billion sale of Treasury bonds last April. By one calculation, by pushing up the interest rate it has to pay, the trades cost the government $80 million. ANZ benefited on the day, allegedly, by buying low and selling high.
Buying bonds or shares for the purpose of moving prices is illegal. ASIC would have to prove a nefarious motive behind the trading in court.
Defining where legitimate trading becomes conscious manipulation poses a tough legal challenge for ASIC – and one worth pursuing if Australians are to be confident the $900 billion government debt market isn’t being plundered by bankers. The industry was meant to be cleaned up by the royal commission into misconduct in the banking, superannuation and financial services industry, which finished five years ago.”
There needs to be serious penalties imposed if this is proved up in court.
But why does the Treasury need a private bank to smooth trades? And at a cost of $80 million for $14 billion worth of bonds?
If Bank Executives want to be paid millions for managing a company they should also be fined millions for mismanaging it. You can’t privatise the upside and socialise the downside!
I lobbied for much tougher penalties a few years ago for Bank Executives. And I quote:
“Law-breaking bankers could be in the gun for million-dollar fines after LNP Senator Gerard Rennick said he would support a move to impose penalties on dodgy finance executives.
If passed, laws establishing the Financial Accountability Regime (FAR) and the Compensation Scheme of Last Resort (CSLR) will see close to 90 per cent of the recommendations Kenneth Hayne made in his final report to government enacted.
Senator Rennick told The Australian Financial Review he would support an amendment to the FAR imposing million-dollar fines on law-breaking finance executives.
“There needs to be a financial penalty there, absolutely. The fine should have stayed up to $1 million,” said Senator Rennick.
The government had considered levying individual fines worth up to $1,050,000 for law-breaking executives in the FAR, but the penalties were later removed from the legislation after intense lobbying from the banks, as revealed by The Australian Financial Review.”
Quotes from:
ANZ’s board could be on precipice of bank-defining scandal over trades in government bonds (afr.com)
Million-dollar fines for bankers possible as LNP senator goes rogue (afr.com)
