The only big four bank with the words "New Zealand" in its name appears to be having the most trouble in that market with the bank stating this morning that it will work with the Reserve Bank of New Zealand (RBNZ) on independent reviews to reassure the central bank that it was operating in a prudent manner.
The news is the latest development in a series of "mishaps" at Australia and New Zealand Banking Group (ASX: ANZ) and comes after the RBNZ revoked ANZ Bank's right to calculate its own capital adequacy ratio for its New Zealand division last month because it had been secretly using a non-approved calculation model for five years.
ANZ Bank announced this morning it welcomed the independent reviews of its capital models and attestation process – but seriously, what choice does it have?
ANZ Bank making nice with RBNZ
"The Board had been working on commencing an independent review to provide assurance that our capital models and theDirectors' attestation process are robust and operating in a prudent manner," said ANZ's chair Sir John Key.
"Following discussions with the RBNZ, the Directors agree that the best way to achieve this assurance is working with the RBNZ and an independent party to undertake the necessary reviews."
It's not a good look for a bank but the timing couldn't be worse as investors are already sensitive about poor practices at ASX-listed banks in wake of the Royal Commission.
The RBNZ is also looking at increasing capital adequacy ratios across the industry, which would affect not only ANZ Bank, but its peers like Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd. (ASX: NAB) and Commonwealth Bank of Australia (ASX: CBA).
New Zealand a thorn in the side of ANZ Bank
And just in case things aren't looking embarrassing enough for ANZ Bank, it's New Zealand boss, David Hisco, had to be stood down last week in an alleged expenses rort with the bank accusing him of racking up $25,000 on chauffeured driven cars for personal outings.
Some might be wondering if ANZ Bank and its peers should just exit the New Zealand market, particularly if regulators there mandate an increase in the cash buffer, which could put dividends and other capital management programs at risk.
It's too early to be making that call or even contemplating how the banks will divest their operations across the Tasman, although it is food for thought on what ANZ Bank will call itself then if it breaks its links to New Zealand.
It's probably no surprise that ANZ Bank has the most exposure of the big four ASX banks to that market.
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