An independent review into ANZ New Zealand has seen former New Zealand Prime Minister John Key come under fire over governance issues at the bank.
The Reserve Bank of New Zealand (RBNZ) is requesting assurance from ANZ that it is operating in a prudential manner in New Zealand by way of an independent review and report covering ANZ's compliance with RBNZ's capital adequacy requirements.
Following that, ANZ will have to produce a second report which will assess the effectiveness of ANZ New Zealand's directors' attestation and assurance framework, internal governance, risk management and internal controls.
ANZ New Zealand board chair John Key said: "The board had been working on commencing an independent review to provide assurance that our capital models and the directors' attestation process are robust and operating in a prudent manner."
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"Following discussions with the RBNZ, the directors agree that the best way to achieve this assurance is working with the RBNZ and an independent party to undertake the necessary reviews."
Responding to news of the review, Deputy New Zealand Prime Minister Winston Peters said in an interview with TVNZ: "I think it's wrong that Mr Key can be the head of ANZ New Zealand and sit on the Australian equivalent as well. That's a massive conflict of interest."
Key is an independent non-executive director on the ANZ board while also being chair of the ANZ Bank New Zealand board.
"I think there are some serious questions to be answered and there's much more to be unearthed," Peters said.
When asked whether he thinks Key should have to step down, Peters said: "That's not my role; it's the Governor of the Reserve Bank who could make that request. But if I was the Governor of the Reserve Bank I would have asked for his resignation, yes."
Peters explained that in his view the questions around ANZ New Zealand's prudent upholding of capital requirements are extremely serious.
"The capital requirements are designed so that we don't end up like, for example, Greece or Portugal where there are people lined up for kilometres down the street trying to get their money out because the banks didn't have enough by way of reserve," Peters said.
Peters also denounced Key for blaming the capital requirements mistake on a "low surrogate" at the bank.
Key said in a press conference the issue was created by a "mistake" caused by a "junior staffer" at ANZ New Zealand.
The independent reviews come after ANZ New Zealand chief executive David Hisco was forced to step down last week following a review of his personal expenses, which revealed the long-term personal use of corporate chauffeur cars and Hisco charging ANZ for storage without proper disclosure.
Key said in a press conference at the time Hisco's resignation proved that, "When people don't do the right thing we hold them to account no matter their status or position in the organisation."