FILE PHOTO: A view of the facade of an ANZ Bank building in the Sydney Central Business District, in Sydney, Australia, May 14, 2024. REUTERS/Jaimi Joy/File Photo

By Scott Murdoch

SYDNEY (Reuters) -Australia's ANZ Group has a 'good news' culture that deters staff from speaking up about potential mistakes while bureaucracy hampers some of its processes, a review into the bank and its non-financial risk management practices has found.

ANZ, Australia's fourth largest lender by market capitalisation, published the McKinsey review on Friday as part of a remediation process ordered by Australian regulators.

The lender had a culture that made its staff reluctant to speak up, the report found.

"ANZ values collaboration, but the involvement of multiple stakeholders can dilute accountability and delay decision making," it said.

"ANZ's 'good news' culture can mask problems, diminishing awareness and preventing ANZ's decision makers from recognising emerging risks or understanding the full scope of issues."

The report also found some ANZ staff displayed 'limited curiosity' and said a stronger 'tone from the top' was needed from senior managers to improve non-financial risk practices.

"ANZ employees can prefer to 'stay in their own lane', leading to assumptions that problems will be addressed by someone else," the report said.

"It is not common to challenge or ask questions about areas outside their immediate area of responsibility."

ANZ in April agreed to a court-enforced undertaking with the country's banking regulator to improve its risk management after its markets division was accused of poor trading practices during a A$14 billion ($9.10 billion) government bond issuance on April 19, 2023.

The bank has submitted an action plan to fix its problems that has been accepted by the Australian Prudential Regulation Authority (APRA). The plan has not been made public.

In September, ANZ accepted a A$240 million penalty from the Australian Securities and Investments Commission (ASIC) over the bond deal, and other cases of wrongdoing. It was the largest ever single-entity penalty sought by the corporate regulator.

ASIC has brought 11 civil penalty proceedings against ANZ since 2016, with total penalties exceeding A$310 million.

ANZ's chief executive Nuno Matos, who joined the bank in May from HSBC, has said improving ANZ's non-financial risk management was one of his highest priorities.

($1 = 1.5389 Australian dollars)

(Reporting by Scott Murdoch; Editing by Kate Mayberry)