Finance Minister Grant Robertson put the hard word on bank bosses during a Friday morning conference call while the ANZ Bank has brought in a public relations heavyweight to assist with crisis management.
The Herald understands that Robertson told chief executives from the major banks that he was under pressure to call a royal commission into banking on the back of controversies related to ANZ and its departing chief executive David Hisco.
The Finance Minister also wanted to discuss the conduct and culture of the major banks, a person close to the discussion says.
Robertson said it was not his preference to hold a royal commission, but also indicated that any further revelations of bad behaviour by banks would make the pressure hard to resist.
Bankers' Association chief executive Roger Beaumont confirmed the conference call took place, and that he was also on the line.
Beaumont sought to play down the call, saying it was routine for the minister to consult with the industry.
"It was a pointed discussion, but only because he [Robertson] had a lot to cover in a concentrated amount of time," Beaumont said.
A spokesperson for Robertson said the call had been in the diary for "several weeks" and a range of matters were discussed.
"The minister confirmed his position that while the Government does not believe a royal commission is necessary – as bank reform work is under way – the banks need to work hard to retain public confidence."
Calls have been getting louder for a commission of inquiry into banking here following the issues raised by Hisco's departure, including the irregularities in his expenses and the sale by ANZ of the St Heliers house he lived in to his wife Deborah Walsh.
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Kerry McDonald, one of New Zealand's most experienced company directors, has said New Zealand needed to look closely at banking in much the same way as Australia's royal commission, which exposed widespread wrongdoing in the sector there.
Australia's banking commission released a scathing report in February that called for tougher regulation, more scrutiny of pay and made 76 recommendations to overhaul the industry.
In New Zealand a banking sector report by the Financial Markets Authority and Reserve Bank found "significant weaknesses" in the way New Zealand banks govern and manage risks, and said changes need to be made.
But it revealed only a small number of issues relating to poor conduct by bank staff relative to the issues being addressed in Australia.
ANZ calls in PR heavyweight
Meanwhile, the Herald understands ANZ's board has called in Tina Symmans to run crisis management at the bank and go back through everything in the Hisco file.
Symmans has held senior corporate roles at Telecom, before its break-up, and Contact Energy, and is known as a go-to person for major corporates seeking advice on government relations, issues management and brand development.
Robertson's meeting with local bank bosses followed an intense meeting the previous Friday with Reserve Bank Governor Adrian Orr, which canvassed the ANZ's breach of capital ratio and the Hisco saga.
That meeting appeared to have resulted in moves by the Reserve Bank to request two independent reports relating to ANZ governance.
ANZ chairman Sir John Key has admitted ANZ New Zealand's directors failed in their due diligence obligations over a risk capital model that was decommissioned without Reserve Bank approval.
The error resulted in a Reserve Bank censure and an order to ANZ New Zealand to increase capital for operational risk by about 60 per cent to $760 million as a safety net to absorb possible losses.
"We 100 per cent own that problem," said Key, who chairs ANZ New Zealand's board and sits on the board of ANZ's Australian parent. "I own that problem. There's no ambiguity. I'm the chairman."
Last week the Financial Markets Authority confirmed it was looking into the issues around "related party transactions" in ANZ's financial statements in response to the media attention on the sale of the St Heliers Bay Rd house.
The house was initially purchased by ANZ New Zealand-owned subsidiary company Arawata Assets in 2011 for $7.5 million and, despite a booming property market over the next six years, the property was on-sold to Hisco's wife Deborah Walsh in July 2017 for $6.9m.
- Additional reporting by Duncan Bridgeman
• March - Anomalies were discovered in the way David Hisco was recording his expenses after the Australian chief executive Shayne Elliot undertook a review of executive team.
• May 17 - ANZ censured by Reserve Bank for not using an approved model for working out its capital.
• May 29 - ANZ informs Reserve Bank of New Zealand about the Hisco investigation
• May 30 - Staff are told Hisco is taking extended sick leave.
• June 17 - ANZ announces Hisco is leaving the company as board reveals they are not happy with way he "mischaracterised" expenses.
• June 21 - ANZ NZ board called to a "please explain" meeting with the Reserve Bank. Hours later it emerges ANZ sold a luxury property to David Hisco's wife for below the market price.
• June 24 - Reserve Bank demands two independent reports from the ANZ on compliance with capital adequacy and directors attestation and assurance framework.
• June 28 - Financial Markets Authority says it is looking into related party transactions in ANZ's financial statements in response to the sale of the house to Hisco's wife.