Comment ..Note Mike Smiths response to Opes Expressing ANZ as Bankers and Custodians
STEPHEN LONG: In the litigation arising from the Opes Prime problems, ANZ has been running what some have dubbed the "Sergeant Schultz defence"; we knew nothing, yet the offer documents that Opes Prime issued to its customers featured your logo, the ANZ logo and livery and referred to ANZ and banker and custodian. How do you think ANZ could allow its brand to be used in this way and not know what was going on with Opes Prime?
MIKE SMITH: Well I mean Opes have obviously used the brand and the relationship with ANZ for their own marketing document over which we have had no control.
STEPHEN LONG: You must have known though.
ANZ to review lending after Opes Prime collapse PRINT FRIENDLY EMAIL STORY PM - Monday, 14 April , 2008 18:17:00 Reporter: Stephen Long MARK COLVIN: The bank behind the collapsed stockbroker Opes Prime, ANZ, today announced a review of its involvement with the failed company. ANZ's chief executive Mike Smith will lead the review.
It will examine the bank's control and oversight of securities lending. Mr Smith concedes that ANZ's reputation has suffered from its involvement in the debacle. But in advance of the review, he says he thinks the problem stems from a few individuals and not a wider problem in the bank's culture.
Mike Smith spoke to Stephen Long
STEPHEN LONG: Mike Smith why do you feel you need to lead this review into Opes Prime and its fallout?
MIKE SMITH: Well I think it's very clear that the reputation of ANZ has been somewhat bruised by this event and I think that that is a shame in that ANZ is an institution with a first rate reputation. It is a fine institution and we need to rectify that has been done.
STEPHEN LONG: How serious do you think that damage is to date?
MIKE SMITH: Well I mean it's hard to put … to quantify it. All I can say is that you only have to read the papers to see that the amount of attention we're getting is not particularly good.
STEPHEN LONG: And it's not just Opes Prime, it seems as if ANZ is exposed to a host of highly leveraged troubled companies in the market; Tricom, Allco, Centro. Do you think that something broader has gone wrong in oversight at the bank?
MIKE SMITH: No I don't think so. I mean, you know, most of these issues are what I would call standard banking problems that occur when the cycle changes, which is exactly what has happened. I mean I think the issue around Opes Prime is different in that there were irregularities within the company; this has created the problem.
STEPHEN LONG: But even if we leave aside the irregularities, the clear problems in the management of Opes Prime itself; how could ANZ get itself in a situation where it was bankrolling a broker that was giving people finance to invest in many cases in penny dreadful stocks and then accepting those same stocks as collateral?
MIKE SMITH: Well I think this is part of the review that I have set up is to understand exactly how this occurred. I suspect what happened is that when the original securities lending business was set up, there was probably very sensible and good policy in which to manage it by.
But over the years that has probably been adjusted and adapted and I really want to work out why that has changed and who has sanctioned that and for what reason.
STEPHEN LONG: Because it does seem, even though you have four executives on "gardening leave" so to speak, that this smacks of some sort of wider systemic failure.
MIKE SMITH: No, I don't think it is a systemic failure. I think that this is a particular issue which is an isolated unit within a small unit of the institutional bank and I don't believe it's systemic.
STEPHEN LONG: In the litigation arising from the Opes Prime problems, ANZ has been running what some have dubbed the "Sergeant Schultz defence"; we knew nothing, yet the offer documents that Opes Prime issued to its customers featured your logo, the ANZ logo and livery and referred to ANZ and banker and custodian. How do you think ANZ could allow its brand to be used in this way and not know what was going on with Opes Prime?
MIKE SMITH: Well I mean Opes have obviously used the brand and the relationship with ANZ for their own marketing document over which we have had no control.
STEPHEN LONG: You must have known though.
MIKE SMITH: I suspect that somebody has noticed; I sincerely hope so. And indeed this is going to be part of the review process as to what happened and what went on. Why was this not picked up? But the fact is that our client was Opes; it was not the clients of Opes.
STEPHEN LONG: And yet there's evidence that's been given in court and not contradicted to date, that ANZ executives met with Opes Prime executives and clients and promoted Opes Prime.
MIKE SMITH: Yeah, I mean that's been a … there has been an accusation of that but I couldn't possibly comment at the moment. I mean, that is before the lawyers.
STEPHEN LONG: The tenor of what you've said in this interview suggests that you think this is isolated to a few individuals within the bank in executive roles. How can you at this stage rule out the possibility that it does speak of a wider cultural problem?
MIKE SMITH: I don't think it speaks of a wider cultural problem.
STEPHEN LONG: But how can you rule it out so early? I mean the review has just begun.
MIKE SMITH: I'm not. I'm not ruling it out but I would be very surprised. But you know you asked me the question, do I believe that there is a broader systemic problem within the bank and I don't believe there is.
MARK COLVIN: The chief executive of ANZ, Mike Smith, speaking to Stephen Long. Related Audio: ANZ chief Mike Smith tells PM about the review ANZ chief executive Mike Smith tells PM's Stephen Long he will lead a review into his bank's control and oversight of securities lending, after the collapse of Opes Prime. RealMedia 28k+ WinMedia 28k+ MP3 PRINT FRIENDLY EMAIL STORY
ANZ Price at posting:
$14.16 Sentiment: None Disclosure: Not Held
(20min delay)