Malaysian corruption settlement makes a $212Mn hit on ANZ’s profits

Malaysian corruption settlement makes a $212Mn hit on ANZ’s profits

by Nandita Bhardwaj

The profits of ANZ, a renowned financial services company, would reportedly take a hit of approximately $212 million after its Malaysian bank was penalized for failing to stop an international corruption scandal, which eventually ended with the country’s PM being jailed.

In 2007, the firm purchased a significant stake in AMMB Holdings Berhad, 5 years before dishonored former prime minister of Malaysia, Najib Razak started drawing off millions of dollars from a Malaysian state-owned investment fund into his personal account at AMMB.

The scandal sent immense shockwaves throughout Malaysia as well as the rest of the world, bringing down the ruling party that had been in power for almost 61 years in Malaysia and leading to Mr. Razak being sent to prison for nearly 12 years.

On Friday, AMMB announced that it had reached an agreement with country’s Ministry of Finance over its failure to uncover as well as prevent the fraud, also including a penalty of around MR2.83 billion ($900 million).

In an official statement, ANZ stated that the group has since reinforced and improved its processes to meet the current strict regulatory standards.

AMMB stated that it does not need to raise capital so as to pay the fine, but no dividend will be paid to investors as the firm seeks to completely lay focus on its business.

ANZ has denied any connection with the fraud consistently. The bank stated that the settlement with the Malaysian government would decrease the carrying value of the asset from about $1.05 billion to $850 million.

The foray of the big four bank in Asia was mainly driven by Mike Smith, former chief executive, who was recruited from the Hong Kong office of HSBC, also an expert in Asian finance. Smith wanted the region to make up for around 20% of the bank’s earnings by 2012.

The bank would report its half-year financial outcomes in April. Meanwhile, on Monday, shares of ANZ closed 1.6% stronger at $26.59.

Source credit: https://www.smh.com.au/business/banking-and-finance/anz-takes-212m-profit-hit-after-malaysian-corruption-settlement-20210301-p576pl.html

Nandita Bhardwaj

Having a marketing management post graduate degree under her belt, Nandita spent considerable time working in the field of recruitment. However, her real interest lay in playing with words and soon enough, she commenced her career in the field of content creation. Currently, she authors insightfu Read more...