Comment Text:
Foreign banks publicly listed in the US like ANZ Bank should be required to report position limits/exposure and overshoots. They should also provide documentation and report on existing controls and models when valuing credit derivatives. Recently there was an alleged mis-valuation of credit derivative at Deutsche Bank to cover up the mark to market loss from this exotic product referring to attached (1) link below. This is an issue that is not isolated to Deutsche Bank. ANZ Bank have credit derivative exposures such as CDS and asset backed securities reported to APRA and their mark to market was not valued and reported in their risk engine. These derivatives mark to market were not valued and reported to conceal positions and possible losses that could have been disclosed in their provision of credit losses in their balance sheet. ANZ Bank being a publicly listed company in the US since 2008 did not disclosed appropriate controls and credit loss provision in their financial statement relevant to their credit derivatives position therefore in breach of the SOX Act of United States. These credit derivatives are existing positions of ANZ Bank pre GFC and to date. The intention of ANZ Bank not to disclose the valuation of their credit derivative exposure and provision credit losses is a breach to SOX Act. The market quantitative and risk team responsible for measuring the credit derivative products in ANZ Bank is Vidya Bittianda, Daniel Terraran and Clem Perez who are reporting to the Head of Global Market Tony Norman and Head of FI Credit Andrew Stutchbury. These risk managers were also responsible for Opes Prime litigation subjected to comply with the Securities Lending Review as an aftermath of the litigation. See attached link (2). Roles of old and new staff who conducted the implementation of the Securities Lending Review were made redundant in 2011 potentially to conceal all other gross negligent practices of ANZ Bank risk managers pre GFC to 2009 that are found during the review. It will be prudent for the CFTC or Fed Reserve to investigate this issue and the risk managers of ANZ Bank like what happened at JP Morgan and what is about to happen with Deutsche Bank.
(1) http://www.linkedin.com/home?trk=hb_tab_home
(2) http://www.djacobson.com/australian_regulatory_rev/2008/08/anz-bank-securi.html
ANZ Bank is also engaged in physical gold trading, which is an emerging product in the financial market . The consumer is exposed to settlement and market risk in the event of default in physical delivery and change in selling price. In the case of ANZ Bank this is on consignment basis, which makes the consumer only exposed to market risk. A good example of this new product is attaché on the 3rd link. This may not hit US financial market yet but it is another derivative product that can perhaps better regulated in a physical Exchange.
(3) http://robinwestenra.blogspot.com.au/2013/03/gold.html
The CEO of ANZ Bank also do not understand why Basel III and regulatory requirement means to stabilise the global financial market. A really disappointing comment from the CEO of ANZ Bank Mike Smith below considering that Australia will have 2 seat in the G20. At this point we are questioning the ability of APRA to regulate the Australian bank given that ANZ Bank failed to report and allocate capital provisioning to their credit derivative exposures of CDS and asset back securities, which are positions held pre GFC. How many Australian banks have unaccounted credit derivative exposures that is not supervised and watched properly by APRA? Will this cause systemic risk? Why is mike Smith so against Basel III and transparency for the four major banks and ANZ Bank? What is being concealed? How many dead woods do they have in their portfolios? If CFTC and Federal Reserve can investigate ANZ Bank and if proven correct this will be a good example for foreign banks to behave. ANZ Bank’s Ope Prime product hit the consumers of United States and litigations were in progress from pre GFC to 2011. Who could have known that a bank in Australia have effect to consumers in United States.
http://video.theaustralian.com.au/2344640169/No-need-for-the-big-four-banks-Mike-Smith
ANZ Bank also have exposures without counterparty name from clients originating from Hong Kong, Singapore and China, which can potentially be subjected to AML like what recently happened with the corrupt ex chinese official who was jailed in Singapore. ANZ's KYC operation are in India an operational hub environment that is exposed to concealment given the corrupt practices in India and non regulated practices. Banks can offshore their operation hub to countries which are not tightly regulated giving rise to cross border regulatory risk.
http://www.bloomberg.com/news/2013-04-02/former-chinese-official-convicted-of-banking-stolen-funds-1-.html
