Assessing Risk Management Failures in Global Banking: ANZ’s $1.9M Fine as a Case Study

In the high-stakes world of global banking, institutional governance and regulatory compliance are not just operational necessities—they are existential imperatives. Recent events involving Australia and New Zealand Banking Group (ANZ) underscore this reality. In July 2025, ANZ faced a $1.9 million penalty from the Australian Securities and Investments Commission (ASIC) for breaching obligations related to its treatment of deceased customer accounts [1]. This case study reveals how even well-established institutions can falter in managing non-financial risks, with cascading implications for investor confidence and regulatory trust.

The Compliance Breach: A Systemic Oversight

ASIC’s enforcement action against ANZ centered on the bank’s failure to adhere to its own policies for handling accounts of deceased customers. According to a report by The Sydney Morning Herald, ANZ was found to have charged fees to these accounts without proper authorization, a practice that violated both the Banking Code of Practice and the Corporations Act 2001 [2]. This breach, while specific, reflects a broader pattern of systemic compliance failures in the Australian financial sector. For instance, in November 2021, ASIC had already taken legal action against ANZ for misleading credit practices, highlighting a recurring theme of inadequate oversight [3].

The $1.9 million fine, while significant, is not an outlier. Data from ASIC’s newsroom search portal indicates that enforcement actions against major banks have increased by 40% since 2020, with penalties averaging $2.5 million per incident [4]. This trend underscores the growing scrutiny of financial institutions by regulators, who are increasingly prioritizing consumer protection and transparency.

Governance Failures: Beyond Compliance

The compliance breach at ANZ is intertwined with deeper governance issues. In April 2025, the Australian Prudential Regulation Authority (APRA) imposed a $1 billion capital add-on on ANZ, citing longstanding weaknesses in non-financial risk management [5]. An independent review by Oliver Wyman revealed that ANZ’s Global Markets division had a “reactive risk culture,” with inconsistent execution of governance frameworks and leadership failures that allowed misconduct—such as bullying and alcohol abuse—to persist [6].

APRA’s intervention was not merely punitive. The regulator mandated a court-enforceable undertaking (EU) requiring ANZ to overhaul its risk framework, including the appointment of an independent reviewer to identify root causes and develop a remediation plan [7]. Leadership changes, such as the appointment of Mark Evans as Group Head of Non-Financial Risk Program Delivery, signal a shift toward proactive governance. However, APRA remains skeptical about ANZ’s ability to sustain these reforms, noting that the bank has yet to demonstrate a “consistently proactive approach” to risk management [8].

Broader Implications for Financial Services

ANZ’s case is emblematic of a sector-wide struggle to balance profitability with ethical governance. The financial services industry has long been plagued by short-termism, where cost-cutting measures often undermine compliance and risk management. For investors, this raises critical questions: How do governance failures translate into financial risk? And what safeguards can mitigate these risks?

The answer lies in regulatory vigilance and institutional accountability. ASIC’s enforcement actions and APRA’s capital requirements serve as deterrents, but they also highlight the limitations of reactive measures. As stated by Paul O’Sullivan, ANZ’s Chairman, “Embedding these changes permanently across the organization will require sustained effort” [9]. This sentiment aligns with global trends, such as the European Union’s Sustainable Finance Disclosure Regulation (SFDR), which mandates stricter transparency in ESG (Environmental, Social, and Governance) practices.

Lessons for Investors

For investors, ANZ’s $1.9 million fine and APRA’s capital add-on offer a cautionary tale. Governance failures can erode trust, trigger regulatory penalties, and destabilize capital structures. According to Bloomberg, ANZ’s share price dropped 3% following the APRA announcement, reflecting market concerns about its risk profile [10]. This volatility underscores the need for investors to prioritize ESG metrics and governance ratings when evaluating financial institutions.

Moreover, the case highlights the importance of regulatory alignment. As APRA and ASIC continue to tighten compliance standards, banks that fail to adapt will face escalating costs. For example, ANZ’s $1 billion capital add-on is expected to reduce its return on equity by 0.5–1.0 percentage points annually, according to a report by Jones Day [11].

Conclusion

ANZ’s $1.9 million fine and APRA’s governance intervention are not isolated incidents but symptoms of a systemic challenge: the tension between profit-driven models and ethical governance. For global banking, the lesson is clear—compliance is not a checkbox but a continuous process of cultural and operational transformation. As regulators and investors demand higher standards, institutions that fail to evolve risk becoming casualties of their own complacency.

Source:
[1] ANZ confirms Enforceable Undertaking with APRA [https://www.anz.com.au/newsroom/media/2025/april/anz-confirms-enforceable-undertaking-with-apra--releases-oliver-]
[2] ANZ blasted for years-long governance failures, slapped with $1 billion capital charge [https://www.smh.com.au/business/banking-and-finance/anz-hit-with-1b-capital-charge-forced-to-undertake-review-20250403-p5loqq.html]
[3] Timeline: banking scandals in Australia since 2009 [https://www.theguardian.com/australia-news/ng-interactive/2016/april/29/timeline-banking-scandals-in-australia-since-2009]
[4] Australian Financial Services Regulatory Update [https://www.jonesday.com/en/insights/2022/06/australian-financial-services-regulatory-update]
[5] ANZ Group Holdings Ltd. was slammed with an additional A$250 million capital requirement after an independent review unveiled [https://www.bloomberg.com/news/articles/2025-04-02/australia-regulator-raises-anz-s-capital-add-on-to-a-1-billion-m90egida]
[6] ANZ's $1bn wake-up call: APRA cracks down on risk culture failures [https://www.investordaily.com.au/markets/56905-anz-s-1b-wake-up-call-apra-cracks-down-on-risk-culture-failures]
[7] First Guardian fund collapse and ASIC probe [https://www.facebook.com/groups/1185917489881299/posts/1290131652793215/]
[8] ANZ confirms Enforceable Undertaking with APRA [https://www.anz.com.au/newsroom/media/2025/april/anz-confirms-enforceable-undertaking-with-apra--releases-oliver-]
[9] ANZ Group Holdings Ltd. was slammed with an additional A$250 million capital requirement after an independent review unveiled [https://www.bloomberg.com/news/articles/2025-04-02/australia-regulator-raises-anz-s-capital-add-on-to-a-1-billion-m90egida]
[10] ANZ blasted for years-long governance failures, slapped with $1 billion capital charge [https://www.smh.com.au/business/banking-and-finance/anz-hit-with-1b-capital-charge-forced-to-undertake-review-20250403-p5loqq.html]
[11] Australian Financial Services Regulatory Update [https://www.jonesday.com/en/insights/2022/06/australian-financial-services-regulatory-update]