The Commonwealth Director of Public Prosecutions will charge ANZ, Citi and Deutsche Bank with criminal cartel conduct – allegations that all three entities have denied.
The ACCC confirmed in a statement on Friday that the Commonwealth Director of Public Prosecutions (CDPP) intended to commence proceedings against ANZ, alongside two other companies and other individuals, for alleged cartel conduct.
On 7 August 2015, ANZ raised $2.5 billion in equity capital in an institutional share placement of around 80.8 million shares that was fully underwritten by lead managers Deutsche Bank, Citi and JP Morgan.
According to a statement by ANZ to the ASX on Friday morning, “ASIC is investigating whether ANZ's announcement of 7 August 2015 should have stated the joint lead managers took up approximately 25.5 million shares of the placement”.
The major bank’s chief risk officer Kevin Corbally said ANZ did not believe it acted in a way that breached the law in relation to the placement.
“On that basis the bank intends to defend both the company and our employee,” Mr Corbally said.
At a press conference on Friday, treasurer Scott Morrison said he had been briefed on the matter and called the criminal cartel charges “very serious matters”, but declined to provide further comment.
“It would be inappropriate of me to offer any other comment than to note that where these charges have come from stem from an ACCC investigation and they are the cop on the beat on this and that will be tested through the proper process,” he said.
Hours after ANZ, Citi also released a statement confirming it to be one of two other companies the CDPP intended to prosecute and that it would “vigorously defend these allegations”.
“Citi steadfastly denies the allegations made against it, and certain employees, by the CDPP in relation to Citi's role as a joint underwriter of the A$2.5 billion equity placement.
“Citi and its employees acted with integrity and without any bad intent in fulfilling the obligations of this underwriting agreement,” the statement said.
“As required by the Market Integrity Rules, Citi also effectively participated in orderly capital markets to ensure that the required outcomes for ANZ and its shareholders were achieved.”
Similarly, Deutsche Bank confirmed with InvestorDaily it expected to receive the same charges.
“Deutsche Bank intends to vigorously defend those charges,” the statement said. “The bank believes it and its staff acted responsibly and in a manner consistent with those rules.”
JP Morgan is not expected to be a party to the CDPP proceedings.
CDPP case a strong one, academic says
University of Sydney Business School finance senior lecturer Andrew Grant said the criminal charges brought to the banks demonstrated the CDPP felt confident it would win the case.
“The ACCC would normally be expected to take civil action against an institution like the ANZ because criminal charges are usually harder to prove,” Mr Grant said.
“Resorting to criminal charges against the ANZ and others would suggest that the authorities feel that they have a particularly strong case.”
Alleged cartel conduct 'credit negative' for ANZ
Research house Moody's Investor Service vice president Frank Mirenzi commented that the charges against ANZ would have an adverse impact on its credit rating.
"The consequences of the potential proceedings could be significant and would be credit negative for ANZ," he said.
"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."
He also pointed out that the allegations came at a time when Australian bank conduct and procedures were being scrutinised by the banking royal commission, which has already had a significant impact on the industry and prompted a number of C-suite and director resignations.
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