Euromoney, June 4 2018
Australia is used to regulatory and reputational calamity, but a case against ANZ, Citi and Deutsche has taken a more personal turn.
The threat of criminal charges has turned a three-year-old ANZ share placement from being just another reputational headache in Australian banking to something that has bankers seriously alarmed.
On Friday, two separate regulatory groups announced proceedings related to a A$2.5 billion ($1.9 billion) share placement by ANZ on August 7, 2015, a placement underwritten by Citigroup, Deutsche Bank and JPMorgan.
In the most serious of the two proceedings, the Commonwealth Director of Public Prosecutions (CDPP) alleges cartel conduct among the joint lead managers, regarding “an arrangement or understanding allegedly made between the joint lead managers in relation to the supply of ANZ shares,” according to a statement from ANZ itself.
This will include proceedings against individuals, including ANZ group treasurer Rick Moscati, former Citi Australia country head Stephen Roberts and former Deutsche Australia CEO Michael Ormaechea.
In addition, the Australian Securities and Investments Commission is looking into the announcement that followed the placement, and specifically is investigating whether or not the announcement should have stated that the joint lead managers took up around 25.5 million of the 80.8 million shares.
The criminal charges will relate to ANZ Bank, Citigroup and Deutsche Bank, but not JPMorgan, which is believed to have self-reported in the case but has declined to comment.
A criminal charge against an institution can have far-reaching consequences: among other things, it could mean the asset-management arms of banks are not allowed to hold assets on behalf of the US government, for example.
The news has rocked the small world of Australian investment banking, already reeling from proceedings by Asic against the big four banks for the alleged rigging of the bank bill swap rate (an allegation Commonwealth Bank of Australia and Westpac contested in court, while ANZ and National Australia Bank settled) and the reputation-shredding salvoes of the continuing Royal Commission into bank behaviour.
The banks involved have said they will defend themselves and their individuals against the allegations.