ANZ is facing criminal charges over alleged cartel conduct related to a $2.5 billion share placement, dealing another blow to Australia’s scandal-hit banking industry.
The lender said the Commonwealth Director of Public Prosecutions will launch proceedings related to how investment banks handled the sale of 80.8 million ANZ shares to institutional buyers in 2015.
The charges will be laid following an investigation by the Australian Competition and Consumer Commission.
“The charges will involve alleged cartel arrangements relating to trading in ANZ shares following an ANZ institutional share placement,” ACCC chairman Rod Sims said on Friday.
“It will be alleged that ANZ and the individuals were knowingly concerned in some or all of the conduct.”
Financial regulator ASIC is investigating whether ANZ should have told the market that the lead managers – the investment banks running the sale – took up 25.5 million shares in a placement that lifted the bank’s capital reserves to meet new regulatory requirements.
ANZ group treasurer Rick Moscati will be named in the proceedings, and the ACCC expects other individuals to be named.
Citi and Deutsche Bank – who, along with JPMorgan, were underwriters of the placement – also received notice of charges.
Citi “steadfastly” denied the allegations made against it, and Deutsche said it would “vigorously” defend the charges.
“Citi and its employees acted with integrity and without any bad intent in fulfilling the obligations of this underwriting agreement,” Citi said in a statement.
In an effort to strengthen the country’s financial system, the Australian Prudential Regulation Authority in 2015 asked the major banks to hold more money in reserve against their mortgage lending.
But ANZ’s raising, which comprised the placement and a $500 million share purchase plan for ordinary shareholders, caught the market by surprise because then-chief executive Mike Smith had suggested it would not be necessary.
ANZ shares suffered their biggest one-day fall in nearly seven years on the announcement, and retail shareholders were angry at the preferential treatment given to institutional investors.
“I do appreciate that there was a level of surprise that we moved so quickly and through a placement,” Mr Smith said in August 2015.
“Our judgment was that it was the best way of balancing support for retail shareholders and completing the capital raising in a fair, timely and efficient way.”
The allegations are the latest in a long line to hit ANZ and the banking sector in general, which is subject of a long-running royal commission that has heard wide-ranging instances of misconduct or poor practice by lenders.
ANZ, which recently paid $50 million to settle with ASIC over allegations of rate manipulation, has been grilled over poor financial advice, insufficient income checks on customers, and charging people too much interest on their loans.
ANZ chief risk officer Kevin Corbally said on Friday the bank will defend itself and Mr Moscati against any criminal charges.
“We believe ANZ acted in accordance with the law in relation to the placement,” Mr Corbally said.
At 1238 AEST, ANZ shares were down 35 cents, or 1.3 per cent, at $26.86, making them the worst performing of the big banks.