At time of writing, the share price of Australia and New Zealand Banking Group Ltd [ASX:ANZ] is up by 1.2%, trading at $25.52 per share.
The latest news regarding ANZ involves revelations that its executives had knowledge of attempts by the company to manipulate the Bank Bill Swap Rate (BBSW). Something investors have evidently shrugged off.
The Bank Bill Swap Rate is a short-term money market benchmark interest rate. It is crucial to the financial system as it provides a benchmark for setting personal and commercial loan rates.
These include a range of products such as business loans, mortgages and credit cards.
Senior management discussed freeing up the necessary funds
In court documents published for the first time today, it was revealed that knowledge of BBSW manipulation went right to the top.
The BBSW scandal broke in 2016, resulting in ANZ paying a $50 million settlement.
Current CEO Shayne Elliott was copied in on email chains and sent presentations outlining how the company intended to rig the rate.
He even facilitated freeing up funds to his Institutional division to make the manipulation possible.
In discussing the proposed structural reorganisation, Mr Elliott said it would be a ‘significant benefit to the group,’ and that former CEO Mike Smith ‘is open to the idea’.
In spite of these developments, the announcement that the company has secured a long-desired contract with the NSW government may be buoying the share price today.
Where will ANZ’s share price go from here?
While we have come to expect misconduct from banks since the royal commission, these revelations show how pervasive the culture of greed is at Australian banks.
If you had done a survey of Aussies a few years ago and asked these two questions, you would get a completely different answer today.
- Which type of companies do you dislike the most?
- Which type of companies would you invest in?
The answer a few years ago would likely be ‘banks’ to both.
Now the banks are disliked even more, but seem to no longer look like the safe, profitable investment they once were.
Dividends alone can’t save the share prices of the Big Four, with the royal commission yet to hand in its final report.
But it’s not just the final report that looms over the banks, there a risks involved with the housing market, tightening profit margins and the chance of a global recession triggered by leveraged loans.
Given these factors, there is a possibility of further pain before the stock finds a bottom.
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