ANZ Group Holdings Ltd (ASX: ANZ) shares may not be the top choice among ASX investors at the moment.
You can see it in the stock price as well. Over the past 12 months, ANZ has trailed the broader banking sector by more than 12%.
This comes as the bank continues to dominate headlines due to a deepening bond trading scandal.
The stock faces pressure as the Australian Securities and Investment Commission (ASIC) intensifies its investigation into the bank for alleged market manipulation.
For those holding ANZ shares, this development could impact the stock's trajectory in the near term. Let's see.
ANZ shares on naughty list
ASIC's investigation centres around claims that ANZ manipulated the bond market, potentially costing taxpayers millions.
This is specifically tied to a $14 billion government bond issue in 2023.
In April last year, ANZ was engaged by the Australian Office of Financial Management (AOFM) to facilitate a bond sale.
However, unusual movements in bond rates around the sale triggered concerns, as these fluctuations may have inflated the government's borrowing costs by as much as $80 million.
ASIC has since expanded its investigation to include alleged misreporting of bond trade volumes.
If confirmed, this could expose further compliance and transparency issues for ANZ shares. ASIC has given the case the "highest priority", according to The Australian Financial Review.
This places ANZ at the top of ASIC's naughty list, meaning it will garner plenty of attention from the regulator.
Our investigation concerns suspected market manipulation and contraventions of a number of provisions of the ASIC Act and the Corporations Act.
Meanwhile, the repercussions of the alleged activity are already visible, with the bank reportedly sidelined from two debt deals worth $15 billion.
This includes Australia's inaugural $7 billion green bond.
Being excluded from high-profile deals not only impacts ANZ's revenue but also adds further uncertainty around ANZ shares. Other major ASX-listed banks participated in the green bond sale, leaving ANZ out in the cold.
Analysts are divided
Adding to the uncertainty, brokers remain divided on ANZ's outlook. Morgan Stanley recently flagged potential headwinds for ANZ shares, citing pressures on margins and revenue growth amidst rising deposit costs.
The broker also noted challenges with ANZ's acquisition of Suncorp Bank, prompting investors to watch for synergies and strategic clarity.
Meanwhile, consensus rates the stock a hold, according to CommSec data.
Foolish takeout
The cloud of uncertainty over ANZ may weigh on its shares in the near term, particularly as ASIC's investigation continues.
Despite the calamity, the stock is up more than 19% this year to date and has rallied nearly 21% in the past year.
