New Zealand's financial watchdog has ruled that Australia and New Zealand Banking (ANZ) should have disclosed its controversial sale of a property to the wife of its former chief executive, who departed the bank over an expenses scandal.
The finding by New Zealand's Financial Markets Authority (FMA) adds to pressure on the country's largest lender to improve its internal risk controls.
NZ Deputy Prime Minister Winston Peters is among those calling for a management overhaul following a string of governance problems reported by the regulator.
"ANZ New Zealand Group should have disclosed this as a related party transaction in its 2017 financial statements," the FMA said in a statement, of the sale of the property to the wife of former CEO David Hisco.
ANZ said it disagreed that the transaction was "material" to the unit's financial performance, but it "welcomes this opportunity to gain further clarity on the FMA's expectations regarding the disclosure of related party transactions".
The financial watchdog referred the sale to the Reserve Bank of New Zealand (RBNZ) and the Australian Prudential Regulation Authority (APRA), the corporate regulators in each country.
While the RBNZ stopped short of flagging any potential penalty for the lack of disclosure, it told Reuters the transaction is being looked at as part of a wider enquiry into the bank.
Following a similar review in Australia, the country's banking regulator in July fined ANZ and two of its peers $A500 million each for poor risk management and governance practices.
FMA added that it had not investigated suggestions that the NZ$6.9 million ($A6.5 million) sale price for the property was inappropriate.
Media reports said the sale price was well below the market value for the property.
Hisco, who was head of ANZ's New Zealand unit from 2010, abruptly departed the bank in June, amid a dispute about personal expenses including payments for chauffeurs and wine storage that were logged as business expenses rather than personal.
The RBNZ had asked for two reports from ANZ's local unit in June - the first on its compliance with central bank capital adequacy requirements and a second to assess the bank's internal governance, risk management and internal controls.
The FMA's announcement came just hours after ANZ Chairman David Gonski AC published an article on the bank's website about actions the bank is taking to improve governance, culture and accountability.
Australian Associated Press