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“ANZ Fights Aitken, ASIC and In Asia”
AUSTRALIA & NEWZEALAND BANKING GROUP
Executive Summary
The purpose of the report is to analyse a listed company in Australia fighting with ethical and governance issues. The report has selected ANZ Bank for this purpose. Australia and New Zealand Bank ANZ has been operating since 180 years, the company has been operating globally in more than 34 international markets. The bank has a strong presence in Australia, New Zealand, Europe, Middle East Pacific and Asia. The bank lies among the top four in Australia, while is the largest bank in New Zealand, while is also included in the top 50 banks of the world. Two former trader of ANZ sacked the banking group for inappropriate behaviours. The bank was also sued for 10M dollars for drugs and alcohol culture shown by the senior staff members on the dealing floor. ANZ bank announced that the shareholders of the company will be receiving lower dividends and a small reduction in the upcoming profits due to bad debts and extensive regulatory actions since the financial crises. The allegations faced by ANZ and other banks effected their market reputation badly, which is evident from the survey results of consumer satisfaction in banking sector. As per the results of the study the satisfaction of the consumers dropped from 80.5% to 80% since January 2016 to March 2016. The efforts of sustainability depicted by ANZ have revealed a clear schism in the symbolic and substantive efforts towards sustainability. Because in 2014, ANZ was named as the most sustainable company and the leaders in the global banking sector by Dow Jones Sustainability Index. While on the contrary, public image of ANZ bank has remained in the wake of range of scandals like rate fixing allegations, providing dodgy financial advices, disputed fees issues and insider trading
Table of Contents
Executive Summary 2
1.0 Introduction 4
2.0 Significance of Ethical Business Practices 4
3.0 About the Company 5
4.0 Issues Faced by the Company 6
4.1 Effect of the Issue on Financial Performance 7
4.2 Effect on Market Reputation 8
4.3 Effect on Corporate Governance and Sustainability 10
4.4 Management’s Response towards the Issue 13
5.0 Recommendation 14
6.0 Conclusion 14
7.0 References 15
List of Figures
Figure 1: Court Documents
8
Figure 2: Reduction in ANZ Profits
9
Figure 3: Decline in Consumer Satisfaction
11
Figure 4: Decline in Consumer Satisfaction in Australia
11
Figure 5: Consumer Satisfaction among different Channels
12
Figure 6: Highlights of Sustainability
13
Figure 7: ANZ Revised Sustainability Framework
14
1.0 Introduction
The purpose of the report is to analyse a listed company in Australia fighting with ethical and governance issues. The report has selected ANZ Bank for this purpose. The report has firstly presented some of the types of ethical issues faced by companies and its significance. Secondly, a brief introduction of the company is provided. Moving forward, the report has analysed the ethical issues faced by ANZ and its effect on the performance of the company, public image and on its sustainability reporting. Furthermore, the steps taken by the management of the company has also been included in the report. Lastly, the report has presented certain recommendations to the company for dealing with the ethical issues.
2.0 Significance of Ethical Business Practices
In the view of Carroll and Buchholtz (2014) the success of a business is not dependent upon the results presented by its financial reports only, but there are other factors too that plays a significant role in corporate success. These factors include the culture of an organisation, the philosophy of its management, the leadership, the ethical practices and the behaviours of the management with the employees and with its customers also play an important part in its success. Developing a business on ethical foundation helps company in creating a long lasting and positive effect of the company on its employees. Ethical business practices also helps in retaining and attracting customers. Ford and Richardson (2013) added that running a business on ethical grounds also develops a strong bond between the management and the employees, which further creates stability within the firm.
Ferrell and Fraedrich (2015) explained that when an organisation treats its employees in an ethical manner it actually enable them to make constructive decisions in less time. Ethical business practices also boost the morale of the employee and helps them in staying loyal with the company. On the other hand, Broad (2014) noticed that companies follow ethical business practices have observed significant positive increment in the productivity of employees. Because by promoting ethical practices within the company, the management is actually allowing the employees to perform confidently which makes them loyal with the company.
In the same manner, business ethics is not only important for keeping the employees loyal and motivates but is also effective in developing a positive image of the company among its stakeholders, which include customers, investors, shareholders, suppliers, government and the community (Crane and Matten, 2016). Ethical business practice is important not only for the business but also for its stakeholders since, if the company is following all the standards of ethical business practice it shall disclose its accounts fairly and correctly, thereby, letting the investors to make a fair and correct investing decision (Chell, Spence, Perrini, and Harris, 2016). In the same manner, by highlighting the pros and cons of the product/service offered by the company, it will allow the customers to make a wise purchasing decision. Similarly, ethical business practices will also ensure that the company does not waste natural resources or harm the environment by polluting it thereby it also serves the society and the community (Bowie, 2017).
3.0 About the Company
Australia and New Zealand Bank ANZ has been operating since 180 years, The headquarter of the bank is located in Melbourne, as the first branch of the bank opened as the Bank opened in Sydney in 1835 by the name of Bank of Australia, however, the proper operations of the bank started from Melbourne in 1838 (ANZ, 2017 a). The largest market of ANZ bank is Australia, as the company serves about 6 million retail and commercial customers here. The company has about 686 network of branches, 2, 337 ATMs, 28 business centres along with mobile and online banking applications (ANZ, 2017 b).
4.0 Issues Faced by the Company
ANZ bank faced a list of severe issues in the year 2015 and 2016, earlier in 2015 the bank was alleged for interbank rate rigging from ASIC, later one of the former traders of the Bank claimed about unethical business practise observed at ANZ. As per the report of AFR (2016), two former trader of ANZ sacked the banking group for inappropriate behaviours. The bank was also sued for 10M dollars for drugs and alcohol culture shown by the senior staff members on the dealing floor. A “white substance” was also found by the officials from male toilet located at the dealing room. The other trader sacked $ 30M claim and stated that the recovery of “white substance” from the male toilet highlight the toxic culture being practiced and promoted at the bank.
Figure 1: Court Documents
(Source: AFR News, 2016)
The report published by Financial Review (2016) highlighted that the culture observed at the dealing floor of ANZ was odd and against the official culture of the bank. One of the other senior bond salesman has also sued ANZ bank in a separate claim as he was fired by ANZ for about 3$7,000 of running up expenses of his personal rest, payments of healthcare, $18,000 purchases of rare coins and the other charges related to hotels in Hong Kong and Sydney.
The sacking has brought various departures from the bank, as in 2015 head of the markets left the company for misbehaviour and odd culture, other departures have also been observed in the company.
4.1 Effect of the Issue on Financial Performance
As per the report of The Australian (2017), ANZ bank announced that the shareholders of the company will be receiving lower dividends and a small reduction in the upcoming profits due to bad debts and extensive regulatory actions since the financial crises. The report further added that the earnings made from cash has although increased by 24% in 2016, however, it was dragged down by sourced loans. Business Insider Australia (2016) added that the interim dividends of the company will also be cut to 80 c per share from 86 c last year, thus the company would have observed a lower dividend payout ratio.
Figure 2: Reduction in ANZ Profits
(Source: Business Insider, 2016)
The figure above has highlighted the decline in the profits of the company, it can be observed that the company has face profit reduction in every area, due to which the return on equity of the company has also decline.
The Australian (2017) reported that ANZ bank recorded 18% reduction in cash profit due to reforms a process which includes sale of Australian wealth management business. In the same manner, the statutory profit after tax of September also reduced by 24% and operating income also reduces 3% and became $ 20.529 billion. Business Insider Australia (2016) stated that Gross Impaired assists of the company has increased by $ 3.17, which increases the impaired assets of the company by 3%. The new charge faced by the company to settle Oswal court case in order to end a $ 2.5 billion claim for the sale of Burrup in Western Australia.
4.2 Effect on Market Reputation
The allegations faced by ANZ and other banks effected their market reputation badly, which is evident from the survey results of consumer satisfaction in banking sector. As per the results of the study the satisfaction of the consumers dropped from 80.5% to 80% since January 2016 to March 2016. The overall decline of 0.9% in the level of customer satisfaction was due to the decline in home loans which decreased by 1.5% and non-home loans that reduced by 0.7%. While on the other hand, Sydney Morning Herald (2016) sated that despite various scandal and issues only a slight decrease and been observed in the level of customer satisfaction.
Figure 3: Decline in Consumer Satisfaction
(Source: Roy Morgan, 2016)
The figure above has shown the level of customer satisfaction for different banks, it can be seen that the customers seems to be more satisfied with banks excluding the big four bank i.e. about 86%. While the combine customer satisfaction from the big four banks have appeared to be 82%, while the customer satisfaction of ANZ bank has appeared to be the least i.e. 78%. Thus, it can be sated that the issues and scandals have affected the market reputation of ANZ bank badly by decreasing its level of customer trust satisfaction.
Figure 4: Decline in Consumer Satisfaction in Australia
(Source: The Sydney Morning Herald, 2015)
The figure above has shown the level of customer’s satisfaction in New Zealand. It can be observed from the figure above that ANZ has not only observed poor customer satisfaction in Australia but also in New Zealand.
Figure 5: Consumer Satisfaction among different Channels
(Source: Roy Morgan, 2016)
In the same manner, the figure above has shown the level of customer satisfaction in different channels of the banking. It can be seen that the satisfaction of the banking has decreased from 90% to 89.5%. Likewise, mobile banking has also been declined from 90.7% to 89.8%, branch banking satisfaction has also declined from 88.5% to 84.9%, and likewise a significant decrease has also been observed in phone banking and advisor banking customer satisfaction.
4.3 Effect on Corporate Governance and Sustainability
ANZ Bank is the Gold Community member of the Global Reporting Initiative (GRI). Thus, the sustainability report of the company is prepared using the GRI reporting framework. The company has been preparing its sustainability report using GRI G4 Guidelines. The material disclosed by the company in the sustainability reports of 2016 was according to the requirements of G4 Financial Services Sector Supplement. On the other hand, the corporate sustainability report of ANZ has also included the external assurance of KPMG, which has assured that the Corporate Sustainability Review provided by the company has considered appropriate indicators GRI G4 in material disclosure (ANZ Sustainability Report, 2016).
Figure 6: Highlights of Sustainability
(Source: ANZ Sustainability Report, 2016)
The figure above has shown the sustainability highlights for the year 2016. It can be seen from the figure above that the company has contributed significantly for the carbon reduction. Similarly, about 113,071 hours were volunteered by the employees for carrying out ethical activities. Whereas, 41.5% of the women in the company were promoted to management positions. In the same manner, the sustainability report of the company also added that a significant cs healthy relations with institutional customers.
Figure 7: ANZ Revised Sustainability Framework
(Source: ANZ Sustainability Report, 2016)
The figure above has shown the framework of sustainability adopted by ANZ, the company has presented a revised framework in 2016 in order to highlight the most material social and environmental issues and its alignment with the stratagem of the bank.
Contrary to the above, the report published by The Conversation (2015) stated that ANZ is included in the four pillars of the Australian Banking System as it is the part of Big 4, and therefore, it plays a significant role in the economy of the country. ANZ is include in the top five companies of the ASX 200 and holds about $ 522 billion in household deposits of Australia, which is equivalent of 1/3 of the total Australian GDP. Thus, the market dominance possessed by the bank brings more responsibility towards the company. However, the efforts of sustainability depicted by ANZ has revealed a clear schism in the symbolic and substantive efforts towards sustainability. Because in 2014, ANZ was named as the most sustainable company and the leaders in the global banking sector by Dow Jones Sustainability Index (The Conversation, 2015).
While on the contrary, public image of ANZ bank has remained in the wake of range of scandals like rate fixing allegations, providing dodgy financial advices, disputed fees issues and insider trading. The report presented by Narayanasamy (2014) further added that in order to improve their public image these Big 4 banks in Australia are using tools of sustainability and thus are investing and funding the fossil fuel industry, great barrier reefs and the manufacturing of nuclear arms.
4.4 Management’s Response towards the Issue
Shayne Elliott took the responsibilities of CEO at ANZ bank at the beginning of 2016. After joining the bank in the middle of the crises the CEO stated that he is ready to shift the dialogue in the bank, the mission is not only to improve the reputation of the bank but also think Bradly about the effect of business decisions taken by the bank in the community and society (Moroko and Duffy, 2016). The CEO of the bank stated that the company is planning to sell its non-core business activities including the domestic wealth business and minority stakes in Bank of Tianjin Co., Shanghai Commercial Bank, PT Bank Pan Indonesia and Malaysia AMMB Holdings (Lee, 2017).
The closing of these banks would help in transforming the culture of the bank. The management of the bank belies that it would be easier to manage a smaller and simpler bank, because in this manner, the company would be able to focus on its core business practices and core customers. Furthermore, the CEO stated that the company will take strict actions against people involved in unethical business practices and will also reform it approach and practice in order to include more transparency in its businesses (Financial Review, 2016).
5.0 Recommendation
Following recommendation are presented to the company:
· The CEO of the company shall assure that the activities of the bank are based on the sustainable practices designed by the state and the regulatory bodies.
· In order to ensure ethical practise in all aspects and domain of the business the duties of the directors shall also be reformulated and social sustainability, environmental sustainability and ethical practices shall be embedded in the system of corporate governance followed by the company.
· In the same manner, it has also been observed that companies use robust governance and CSR activities in order to hide their wrongdoings such as rate rigging and other scandals. Thus, it is recommended that CSR and corporate governance activities shall not be used a tool to glorify the image of the company, but companies shall genuinely work for the betterment of the society in which they operate and earn.
6.0 Conclusion
It can be concluded that ANZ bank has been facing different difficulties due to the scandals it has been facing. The company is found to be involved in serious unethical as well illegal activities. However, the CEO of the company has assured to take reforming steps by selling or shutting some of the non-core business activities. Moreover, it has also been observed that the issues faced by the company has effected its financial performance, market reputation and trust and the satisfaction of the customers. However, the sustainability report does not seem to be effected by the scandals faced by the company. Whereas, it has also been found that there is a significant difference between the substantive materials included by the company in its report and the image of the company in the public
7.0 References
ANZ, 2016. Sustainability Report. [Online] available at < http://www.anz.com/about-us/corporate-sustainability/reporting-performance/sustainability-reporting/> [Accessed 30 Aug. 2017]
ANZ, 2017 a. History. [Online] available at [Accessed 30 Aug. 2017]
ANZ, 2017 b. Business Structure. [Online] available at < http://www.shareholder.anz.com/our-company/business-structure?_ga=2.77136021.1869179437.1504103777-996994822.1504103777> [Accessed 30 Aug. 2017]
Bowie, N.E., 2017. Business ethics: A Kantian perspective. Cambridge University Press.
Broad, C.D., 2014. Five types of ethical theory (Vol. 2). Routledge.
Business Insider Australia, 2016. ANZ misses, profit falls 18%. [Online]. Available at: [Accessed 30 Aug. 2017].
Carroll, A. and Buchholtz, A., 2014. Business and society: Ethics, sustainability, and stakeholder management. Nelson Education.
Chell, E., Spence, L.J., Perrini, F. and Harris, J.D., 2016. Social entrepreneurship and business ethics: does social equal ethical?. Journal of Business Ethics, 133(4), pp.619-625.
Crane, A. and Matten, D., 2016. Business ethics: Managing corporate citizenship and sustainability in the age of globalization. Oxford University Press.
Ferrell, O.C. and Fraedrich, J., 2015. Business ethics: Ethical decision making & cases. Nelson Education.
Financial Review, 2016. Sacked ANZ trader says bank tolerated drugs, strip clubs. [Online] Financial Review. Available at: [Accessed 30 Aug. 2017].
Ford, R.C. and Richardson, W.D., 2013. Ethical decision making: A review of the empirical literature. In Citation classics from the Journal of Business Ethics (pp. 19-44). Springer Netherlands.
Lee, N., 2017. Walking the Second Mile before the First: A Corporate Social Responsibility Conundrum?. In Stages of Corporate Social Responsibility (pp. 139-159). Springer International Publishing.
Moroko, L. and Duffy, S., 2016. Trashing the brand: ANZ and CBA could pay a high price for choosing profit over people. The Conversation, 18.
Narayanasamy, S., 2014. Banking on Shaky Ground: Australia’s Big Four Banks and Land Grabs. Oxfam Australia.
Reuters, 2016. ANZ CEO says taking steps to change culture after scandals. [Online] U.S. Available at: [Accessed 30 Aug. 2017].
Roy Morgan, 2016. Consumer satisfaction with big four banks continues to slide in March. [Online]. Available at: [Accessed 30 Aug. 2017].
The Australian, 2017. Financial advice scandal widens. [Online]. Available at: [Accessed 30 Aug. 2017].
The Conversation, 2015. Australia’s banking four pillars wobbly on sustainability record. [Online] available at < https://theconversation.com/australias-banking-four-pillars-wobbly-on-sustainability-record-44521> [Accessed 30 Aug. 2017]
The Sydney Morning Herald, 2015. ANZ, NAB trail in bank satisfaction ratings. [Online]. Available at: [Accessed 30 Aug. 2017].
The Sydney Morning Herald, 2016. ANZ Bank cuts dividend as profits fall 24 per cent. [Online]. Available at: [Accessed 30 Aug. 2017].
Weiss, J.W., 2014. Business ethics: A stakeholder and issues management approach. Berrett-Koehler Publishers.
2
“ANZ Fights Aitken, ASIC and In Asia”
AUSTRALIA & NEWZEALAND BANKING GROUP
Executive Summary
The purpose of the report is to analyse a listed company in Australia fighting with ethical and governance issues. The report has selected ANZ Bank for this purpose. Australia and New Zealand Bank ANZ has been operating since 180 years, the company has been operating globally in more than 34 international markets. The bank has a strong presence in Australia, New Zealand, Europe, Middle East Pacific and Asia. The bank lies among the top four in Australia, while is the largest bank in New Zealand, while is also included in the top 50 banks of the world. Two former trader of ANZ sacked the banking group for inappropriate behaviours. The bank was also sued for 10M dollars for drugs and alcohol culture shown by the senior staff members on the dealing floor. ANZ bank announced that the shareholders of the company will be receiving lower dividends and a small reduction in the upcoming profits due to bad debts and extensive regulatory actions since the financial crises. The allegations faced by ANZ and other banks effected their market reputation badly, which is evident from the survey results of consumer satisfaction in banking sector. As per the results of the study the satisfaction of the consumers dropped from 80.5% to 80% since January 2016 to March 2016. The efforts of sustainability depicted by ANZ have revealed a clear schism in the symbolic and substantive efforts towards sustainability. Because in 2014, ANZ was named as the most sustainable company and the leaders in the global banking sector by Dow Jones Sustainability Index. While on the contrary, public image of ANZ bank has remained in the wake of range of scandals like rate fixing allegations, providing dodgy financial advices, disputed fees issues and insider trading
Table of Contents
Executive Summary 2
1.0 Introduction 4
2.0 Significance of Ethical Business Practices 4
3.0 About the Company 5
4.0 Issues Faced by the Company 6
4.1 Effect of the Issue on Financial Performance 7
4.2 Effect on Market Reputation 8
4.3 Effect on Corporate Governance and Sustainability 10
4.4 Management’s Response towards the Issue 13
5.0 Recommendation 14
6.0 Conclusion 14
7.0 References 15
List of Figures
Figure 1: Court Documents
8
Figure 2: Reduction in ANZ Profits
9
Figure 3: Decline in Consumer Satisfaction
11
Figure 4: Decline in Consumer Satisfaction in Australia
11
Figure 5: Consumer Satisfaction among different Channels
12
Figure 6: Highlights of Sustainability
13
Figure 7: ANZ Revised Sustainability Framework
14
1.0 Introduction
The purpose of the report is to analyse a listed company in Australia fighting with ethical and governance issues. The report has selected ANZ Bank for this purpose. The report has firstly presented some of the types of ethical issues faced by companies and its significance. Secondly, a brief introduction of the company is provided. Moving forward, the report has analysed the ethical issues faced by ANZ and its effect on the performance of the company, public image and on its sustainability reporting. Furthermore, the steps taken by the management of the company has also been included in the report. Lastly, the report has presented certain recommendations to the company for dealing with the ethical issues.
2.0 Significance of Ethical Business Practices
In the view of Carroll and Buchholtz (2014) the success of a business is not dependent upon the results presented by its financial reports only, but there are other factors too that plays a significant role in corporate success. These factors include the culture of an organisation, the philosophy of its management, the leadership, the ethical practices and the behaviours of the management with the employees and with its customers also play an important part in its success. Developing a business on ethical foundation helps company in creating a long lasting and positive effect of the company on its employees. Ethical business practices also helps in retaining and attracting customers. Ford and Richardson (2013) added that running a business on ethical grounds also develops a strong bond between the management and the employees, which further creates stability within the firm.
Ferrell and Fraedrich (2015) explained that when an organisation treats its employees in an ethical manner it actually enable them to make constructive decisions in less time. Ethical business practices also boost the morale of the employee and helps them in staying loyal with the company. On the other hand, Broad (2014) noticed that companies follow ethical business practices have observed significant positive increment in the productivity of employees. Because by promoting ethical practices within the company, the management is actually allowing the employees to perform confidently which makes them loyal with the company.
In the same manner, business ethics is not only important for keeping the employees loyal and motivates but is also effective in developing a positive image of the company among its stakeholders, which include customers, investors, shareholders, suppliers, government and the community (Crane and Matten, 2016). Ethical business practice is important not only for the business but also for its stakeholders since, if the company is following all the standards of ethical business practice it shall disclose its accounts fairly and correctly, thereby, letting the investors to make a fair and correct investing decision (Chell, Spence, Perrini, and Harris, 2016). In the same manner, by highlighting the pros and cons of the product/service offered by the company, it will allow the customers to make a wise purchasing decision. Similarly, ethical business practices will also ensure that the company does not waste natural resources or harm the environment by polluting it thereby it also serves the society and the community (Bowie, 2017).
3.0 About the Company
Australia and New Zealand Bank ANZ has been operating since 180 years, The headquarter of the bank is located in Melbourne, as the first branch of the bank opened as the Bank opened in Sydney in 1835 by the name of Bank of Australia, however, the proper operations of the bank started from Melbourne in 1838 (ANZ, 2017 a). The largest market of ANZ bank is Australia, as the company serves about 6 million retail and commercial customers here. The company has about 686 network of branches, 2, 337 ATMs, 28 business centres along with mobile and online banking applications (ANZ, 2017 b).
4.0 Issues Faced by the Company
ANZ bank faced a list of severe issues in the year 2015 and 2016, earlier in 2015 the bank was alleged for interbank rate rigging from ASIC, later one of the former traders of the Bank claimed about unethical business practise observed at ANZ. As per the report of AFR (2016), two former trader of ANZ sacked the banking group for inappropriate behaviours. The bank was also sued for 10M dollars for drugs and alcohol culture shown by the senior staff members on the dealing floor. A “white substance” was also found by the officials from male toilet located at the dealing room. The other trader sacked $ 30M claim and stated that the recovery of “white substance” from the male toilet highlight the toxic culture being practiced and promoted at the bank.
Figure 1: Court Documents
(Source: AFR News, 2016)
The report published by Financial Review (2016) highlighted that the culture observed at the dealing floor of ANZ was odd and against the official culture of the bank. One of the other senior bond salesman has also sued ANZ bank in a separate claim as he was fired by ANZ for about 3$7,000 of running up expenses of his personal rest, payments of healthcare, $18,000 purchases of rare coins and the other charges related to hotels in Hong Kong and Sydney.
The sacking has brought various departures from the bank, as in 2015 head of the markets left the company for misbehaviour and odd culture, other departures have also been observed in the company.
4.1 Effect of the Issue on Financial Performance
As per the report of The Australian (2017), ANZ bank announced that the shareholders of the company will be receiving lower dividends and a small reduction in the upcoming profits due to bad debts and extensive regulatory actions since the financial crises. The report further added that the earnings made from cash has although increased by 24% in 2016, however, it was dragged down by sourced loans. Business Insider Australia (2016) added that the interim dividends of the company will also be cut to 80 c per share from 86 c last year, thus the company would have observed a lower dividend payout ratio.
Figure 2: Reduction in ANZ Profits
(Source: Business Insider, 2016)
The figure above has highlighted the decline in the profits of the company, it can be observed that the company has face profit reduction in every area, due to which the return on equity of the company has also decline.
The Australian (2017) reported that ANZ bank recorded 18% reduction in cash profit due to reforms a process which includes sale of Australian wealth management business. In the same manner, the statutory profit after tax of September also reduced by 24% and operating income also reduces 3% and became $ 20.529 billion. Business Insider Australia (2016) stated that Gross Impaired assists of the company has increased by $ 3.17, which increases the impaired assets of the company by 3%. The new charge faced by the company to settle Oswal court case in order to end a $ 2.5 billion claim for the sale of Burrup in Western Australia.
4.2 Effect on Market Reputation
The allegations faced by ANZ and other banks effected their market reputation badly, which is evident from the survey results of consumer satisfaction in banking sector. As per the results of the study the satisfaction of the consumers dropped from 80.5% to 80% since January 2016 to March 2016. The overall decline of 0.9% in the level of customer satisfaction was due to the decline in home loans which decreased by 1.5% and non-home loans that reduced by 0.7%. While on the other hand, Sydney Morning Herald (2016) sated that despite various scandal and issues only a slight decrease and been observed in the level of customer satisfaction.
Figure 3: Decline in Consumer Satisfaction
(Source: Roy Morgan, 2016)
The figure above has shown the level of customer satisfaction for different banks, it can be seen that the customers seems to be more satisfied with banks excluding the big four bank i.e. about 86%. While the combine customer satisfaction from the big four banks have appeared to be 82%, while the customer satisfaction of ANZ bank has appeared to be the least i.e. 78%. Thus, it can be sated that the issues and scandals have affected the market reputation of ANZ bank badly by decreasing its level of customer trust satisfaction.
Figure 4: Decline in Consumer Satisfaction in Australia
(Source: The Sydney Morning Herald, 2015)
The figure above has shown the level of customer’s satisfaction in New Zealand. It can be observed from the figure above that ANZ has not only observed poor customer satisfaction in Australia but also in New Zealand.
Figure 5: Consumer Satisfaction among different Channels
(Source: Roy Morgan, 2016)
In the same manner, the figure above has shown the level of customer satisfaction in different channels of the banking. It can be seen that the satisfaction of the banking has decreased from 90% to 89.5%. Likewise, mobile banking has also been declined from 90.7% to 89.8%, branch banking satisfaction has also declined from 88.5% to 84.9%, and likewise a significant decrease has also been observed in phone banking and advisor banking customer satisfaction.
4.3 Effect on Corporate Governance and Sustainability
ANZ Bank is the Gold Community member of the Global Reporting Initiative (GRI). Thus, the sustainability report of the company is prepared using the GRI reporting framework. The company has been preparing its sustainability report using GRI G4 Guidelines. The material disclosed by the company in the sustainability reports of 2016 was according to the requirements of G4 Financial Services Sector Supplement. On the other hand, the corporate sustainability report of ANZ has also included the external assurance of KPMG, which has assured that the Corporate Sustainability Review provided by the company has considered appropriate indicators GRI G4 in material disclosure (ANZ Sustainability Report, 2016).
Figure 6: Highlights of Sustainability
(Source: ANZ Sustainability Report, 2016)
The figure above has shown the sustainability highlights for the year 2016. It can be seen from the figure above that the company has contributed significantly for the carbon reduction. Similarly, about 113,071 hours were volunteered by the employees for carrying out ethical activities. Whereas, 41.5% of the women in the company were promoted to management positions. In the same manner, the sustainability report of the company also added that a significant cs healthy relations with institutional customers.
Figure 7: ANZ Revised Sustainability Framework
(Source: ANZ Sustainability Report, 2016)
The figure above has shown the framework of sustainability adopted by ANZ, the company has presented a revised framework in 2016 in order to highlight the most material social and environmental issues and its alignment with the stratagem of the bank.
Contrary to the above, the report published by The Conversation (2015) stated that ANZ is included in the four pillars of the Australian Banking System as it is the part of Big 4, and therefore, it plays a significant role in the economy of the country. ANZ is include in the top five companies of the ASX 200 and holds about $ 522 billion in household deposits of Australia, which is equivalent of 1/3 of the total Australian GDP. Thus, the market dominance possessed by the bank brings more responsibility towards the company. However, the efforts of sustainability depicted by ANZ has revealed a clear schism in the symbolic and substantive efforts towards sustainability. Because in 2014, ANZ was named as the most sustainable company and the leaders in the global banking sector by Dow Jones Sustainability Index (The Conversation, 2015).
While on the contrary, public image of ANZ bank has remained in the wake of range of scandals like rate fixing allegations, providing dodgy financial advices, disputed fees issues and insider trading. The report presented by Narayanasamy (2014) further added that in order to improve their public image these Big 4 banks in Australia are using tools of sustainability and thus are investing and funding the fossil fuel industry, great barrier reefs and the manufacturing of nuclear arms.
4.4 Management’s Response towards the Issue
Shayne Elliott took the responsibilities of CEO at ANZ bank at the beginning of 2016. After joining the bank in the middle of the crises the CEO stated that he is ready to shift the dialogue in the bank, the mission is not only to improve the reputation of the bank but also think Bradly about the effect of business decisions taken by the bank in the community and society (Moroko and Duffy, 2016). The CEO of the bank stated that the company is planning to sell its non-core business activities including the domestic wealth business and minority stakes in Bank of Tianjin Co., Shanghai Commercial Bank, PT Bank Pan Indonesia and Malaysia AMMB Holdings (Lee, 2017).
The closing of these banks would help in transforming the culture of the bank. The management of the bank belies that it would be easier to manage a smaller and simpler bank, because in this manner, the company would be able to focus on its core business practices and core customers. Furthermore, the CEO stated that the company will take strict actions against people involved in unethical business practices and will also reform it approach and practice in order to include more transparency in its businesses (Financial Review, 2016).
5.0 Recommendation
Following recommendation are presented to the company:
· The CEO of the company shall assure that the activities of the bank are based on the sustainable practices designed by the state and the regulatory bodies.
· In order to ensure ethical practise in all aspects and domain of the business the duties of the directors shall also be reformulated and social sustainability, environmental sustainability and ethical practices shall be embedded in the system of corporate governance followed by the company.
· In the same manner, it has also been observed that companies use robust governance and CSR activities in order to hide their wrongdoings such as rate rigging and other scandals. Thus, it is recommended that CSR and corporate governance activities shall not be used a tool to glorify the image of the company, but companies shall genuinely work for the betterment of the society in which they operate and earn.
6.0 Conclusion
It can be concluded that ANZ bank has been facing different difficulties due to the scandals it has been facing. The company is found to be involved in serious unethical as well illegal activities. However, the CEO of the company has assured to take reforming steps by selling or shutting some of the non-core business activities. Moreover, it has also been observed that the issues faced by the company has effected its financial performance, market reputation and trust and the satisfaction of the customers. However, the sustainability report does not seem to be effected by the scandals faced by the company. Whereas, it has also been found that there is a significant difference between the substantive materials included by the company in its report and the image of the company in the public
7.0 References
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