ANZ chair Key faces calls to resign

ANZ New Zealand chairman and former prime minister Sir John Key is facing calls to resign after the lender was censured by the Reserve Bank.

Tuesday, June 4th 2019, 9:16AM 3 Comments

Former BNZ chairman Kerry McDonald is leading calls for Key to step down after ANZ New Zealand was punished by the Reserve Bank over capital modelling failings.

Last month, the Reserve Bank revoked ANZ's license to model its own risk capital after the bank was found to have used an incorrect model since 2014. ANZ says it discovered the problem in April. Former prime minister Key joined the ANZ board in early 2018.

As part of its punishment, ANZ will need to increase risk capital by at least $277 million. But McDonald believes the punishment does not go far enough.

McDonald has written to the Reserve Bank Governor Adrian Orr calling for a tougher penalty against ANZ. He said he was "amazed" by the "slap on the wrist" given by the central bank.

"In my view ... this failure indicates that the board was/is not competent and also raises serious questions about the bank's management and reinforces my concern with the competence of the boards of the banks generally," McDonald said.

McDonald called for a sweeping overhaul of the ANZ board.

"In my opinion, reflecting the false attestations alone, the chairman and chief executive of the bank should resign or be removed from role, as well as heads of risk, legal and compliance and at least two other directors should be 'retired' as part of a board 'refresh' to improve the overall competence of the board," he added.

The pressure comes as ANZ CEO David Hisco took extended sick leave from the bank last week. Antonia Watson, retail and business banking head, has become acting CEO in Hisco's absence.

Responding to McDonald's comments, an ANZ spokesman said the bank "does not believe there is a systemic failure in its controls and attestation processes".

The spokesman added: "While isolated, and with no impact on customers or the operation of the bank, ANZ New Zealand is disappointed this error occurred. Mr McDonald is welcome to discuss the issue with us at any time."

Tags: ANZ

« Conrad Funds targets growth with mortgage fund

Banks refuse to release submissions on RBNZ proposals »

Special Offers

Comments from our readers

On 4 June 2019 at 4:31 pm MediCare said:

Seems like a bit of grandstanding by Kerry McDonald. We are talking about a fairly minor error considering the scale of the ANZ's operation which was discovered and then self reported by the ANZ. The mistake originated several years before John Key was on the board but corrected on his watch. We are not talking about a moral failure or lack of competence by John Key. Sour grapes, I say.

On 5 June 2019 at 12:37 pm Amused said:

Agree with your comment MediCare. Let's not forget also that Kiwibank and Westpac have previously been censured by the Reserve Bank for breaching their regulatory capital requirements as lenders. It's not as though ANZ's mistake is unique to them only.

On 7 June 2019 at 10:34 am Winka said:

Hey, this is the same John Key who chose to 'waste' $30 million dollars of your money on a total farce of a flag referendum, just prior to his following rapid exit as PM...maybe you have forgotten? Consider this event (mild as you suggested 'Medicare', are you a 'medicine man' or someone with financial 'souse'?) as to the reason why the change to a bank's risk capital has been applied. Do you detect 'clouds on the horizon?' However, is there a real awareness out there of the overkill on compliance, decided first by central government and then directed down to local government (councils) resulting in all those new scaffold companies and white plastic-wrapped buildings to give the impression of a booming economy! In fact, someone reported recent data has revealed that 63% to 67% of 'building' activity during more than the last 7 years has directly been attributed to this over=compliance situation, which has been referred to by many who see it not as 'building' but as DEBT.....near future 'unsustainable DEBT?' When driving around your towns/cities, take notice of things to help you with your own assessments. And should you hire or fire someone just because of a mere $30 million dollar mistake...directly at your expense?? Be a 'thinking Lemming' and don't always follow the others, unless you are a world class swimmer.

Sign In to add your comment