Australian banking was in shock on Friday as No. 3 lender Australia and New Zealand Banking Group Ltd faced criminal cartel charges over a $2.3 billion share issue, along with underwriters Deutsche Bank and Citigroup.
The allegations drove ANZ shares sharply lower in another heavy blow to a sector that has been badly shaken in recent months by revelations of widespread misconduct exposed by an ongoing independent inquiry.
The Australian Competition and Consumer Commission (ACCC) said federal prosecutors would charge ANZ, its Treasurer Rick Moscati, two other unidentified companies and several more unnamed individuals over the 2015 stock placement.
Deutsche Bank and Citigroup, two of ANZ’s three underwriters for the stock issue, said in separate statements they expected to be charged. All three banks denied any wrongdoing.
“The charges will involve alleged cartel arrangements relating to trading in ANZ shares following an ANZ institutional share placement in August 2015,” ACCC Chairman Rod Sims said in a statement.
“It will be alleged that ANZ and the individuals were knowingly concerned in some or all of the conduct.”
The development compounds a publicity nightmare for Australia’s biggest financial firms as they grapple with daily allegations of wrongdoing at the public inquiry, which is scheduled to run to the end of the year.
Barristers for the inquiry have raised the prospect of criminal charges against the country’s top wealth manager, AMP Ltd, over allegations it misled the corporate regulator.
No. 1 lender Commonwealth Bank of Australia is also facing a separate civil lawsuit alleging thousands of breaches of anti-money laundering protocols.
ANZ shares fell as much as 2.4% in early Friday trading, while other banks were down about 1%. The broader market was down 0.7%.
“It’s probably the last thing they need,” Bell Potter banking analyst TS Lim said.
ANZ said it would defend itself and its employees.
“We believe ANZ acted in accordance with the law in relation to the placement,” ANZ Chief Risk Officer Kevin Corbally said in a statement.
Deutsche, which underwrote the share issue with Citigroup and JP Morgan, said in a statement it would “vigorously defend” the charges.
Citigroup said it “steadfastly denies the allegations made against it, and certain employees”. It did not name the employees involved.
JP Morgan declined to comment.
Australian Treasurer Scott Morrison told reporters the planned charges were “very serious matters” but declined to comment further. The ACCC also declined to elaborate on the allegations.
The 2015 placement was to raise A$3 billion ($2.3 billion) to comply with new rules about how much cash banks carried.
Melbourne-based ANZ said it was also co-operating with an investigation by corporate regulator the Australian Securities and Investments Commission (ASIC) over the placement.
The A$79 billion lender said ASIC was investigating whether it should have informed the market in August 2015 that the joint lead managers had kept about 25.5 million shares of the 80.8 million shares issued.