I’ll be honest, I‘m not the biggest fan of the movie ‘The Wolf of Wall Street’. For those of you who haven’t seen the movie, it centres on a stockbroker named Jordan Belfort. At the start of his career, he’s an innocent young man hungry to make it big. But, along the way, he gets corrupted by drugs and money. Towards the end of the movie Jordan’s live revolves around strip clubs, drugs and dodgy deals.
The one thing that annoyed me about the movie is that Jordan and his team were selling penny stocks that may or may not have performed well. And even if their clients lost money, they kept coming back for more. It seemed so unrealistic to me that clients would willingly destroy their wealth. I guess I’m a sucker for realism.
But there are similarities between Jordan’s experiences and ANZ Banking Group [ASX:ANZ], which have come to light recently. It seems like the sequel to The Wolf of Wall Street could be filmed on the ANZ trading floor.
I’m only joking of course. But ANZ’s work culture has been labelled toxic following the sacking of two employees. The former employees, a trader and a broker, are taking ANZ to court. They’re demanding millions from the bank for reportedly withholding bonuses and income.
The former employees are convinced it was the toxic culture that encouraged the behaviour that led to their sacking. And their theory may have some truth to it. ANZ is said to have been involved in potential interest rate rigging. Though never convicted, ANZ’s toxic culture may be leading to poor conduct in engaging with markets.
ANZ’s behaviour gets even worse outside of the office. Strip clubs and drug use are just some of the accusations. But ANZ might not get off this time. Even if the court case ends in ANZ’s favour, there is a potential problem that these events will discourage young new talent from coming on-board. A huge culture change might be the only thing that will get young traders or brokers through their doors.
Since the GFC, more banks have started to clean up their act. Yet ANZ has done little to address this issue. A senior HR official said that he regretted not doing more to fix the management’s culture.
I can personally attest to the somewhat unsavoury work culture within the trading room. Thankfully, the court case may have shone a light on ANZ, forcing them to do something about it.
What does this mean for ANZ share price?
ANZ’s share price opened up 2.15% this morning, but has since retreated. Commonwealth Bank of Australia [ASX:CBA] was the first bank to brand themselves as the ‘ethical bank’ back in November. Their move to promote good management, honesty and openness helped shares climb 4.32% in the following days. If ANZ actively changes the culture from the top down, I’m certain investors will react favourably.
Source: Google Finance
Yet at the end of the day ANZ, like every other bank, is a business. And what does every businesses strive to do? Make money.
ANZ may enforce stricter policies about work culture and trading room procedures. But I believe ANZ, along with any other bank, will only clean up their act as far as it doesn’t hurt profits.
Junior Analyst, Money Morning