Moody’s says the cartel conduct charges against the ANZ Bank are 'significant' and credit negative

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Credit reporting agency Moody’s Investors Service says criminal cartel proceedings against the ANZ Bank are credit negative.

“The consequences of the potential proceedings could be significant and would be credit negative for ANZ,” says Frank Mirenzi, Vice President, Moody’s Investors Service.

“Whilst, at this stage, there is material uncertainty with respect to any potential outcomes from these proceedings, in the short-term they are likely to create further challenges for the bank’s brand and reputation, at a time when Australian bank conduct and procedures are coming under the scrutiny of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.”

The ANZ Bank, its treasurer, Citigroup Global Markets Australia and Deutsche Bank AG face criminal charges relating to alleged cartel conduct during an equity placement.

“ANZ’s announcement that the Commonwealth Director of Public Prosecutions intends to commence proceedings against the bank is credit negative,” says the ANZ.

The bank says the Commonwealth Director of Public Prosecutions advised ANZ it intends to start proceedings for being knowingly concerned in alleged cartel conduct by the joint lead managers of ANZ’s underwritten Institutional Equity Placement of 80.8 million shares in August 2015.

ANZ and Deutsche Bank, which acted as joint underwriter with Citigroup and JP Morgan, say they will defend the charges.

The charges follow an investigation by the consumer watchdog, the ACCC.

“The charges will involve alleged cartel arrangements relating to trading in ANZ shares following an ANZ institutional share placement in August 2015,” says ACCC chairman Rod Sims.

“It will be alleged that ANZ and the individuals were knowingly concerned in some or all of the conduct.”

Corporate regulator ASIC is investigating whether ANZ’s announcement of August 7, 2015, should have stated the joint lead managers took up approximately 25.5 million shares of the placement.

This represented approximately 0.91% of total shares on issue at that time.

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