Key Concepts:
- Duration Manager: A role responsible for managing interest rate risk and futures trading on behalf of a client (in this case, the Commonwealth) and for their own book.
- AFOM (presumably, Australian Financial Operations Management or similar): The entity that A&Z was supposed to keep informed.
- Unconscionable Conduct: Behavior so unreasonable or unfair that it defies good conscience.
- Non-Financial Risk: Risks that are not directly related to financial losses, such as reputational risk, compliance risk, and operational risk.
A&Z's Failures as Duration Manager
The speaker describes A&Z's conduct as "grubby" because the institution failed to uphold its responsibilities as a duration manager. Specifically, A&Z:
- Failed to keep the AFOM informed: A&Z did not adequately communicate its activities to the entity it was managing funds for.
- Failed to follow its own policies and procedures: A&Z violated its internal compliance protocols.
- Failed to keep proper records: A&Z did not maintain adequate documentation of its actions.
- Misled AFOM after discharging their role: Even after completing their duties, A&Z provided misleading information about their activities.
The Nature of the Misconduct
The speaker emphasizes that the cumulative effect of these failures constitutes "unconscionable conduct," which A&Z has admitted to. The core issue is a breach of trust and a failure to manage non-financial risk effectively.
Personal Banking Relationship and Public Perception
The interviewer questions the speaker about their personal banking relationship with A&Z, given the severity of the accusations. The speaker acknowledges banking with A&Z but avoids further comment on their personal banking arrangements.
Betrayal of Trust and Public Disappointment
The speaker clarifies that they feel "let down as a regulator" by A&Z's actions. They suggest that the public should feel "disappointed" that a bank like A&Z cannot manage its non-financial risk.
Synthesis/Conclusion:
A&Z's actions as a duration manager were deemed "grubby" due to a series of failures, including lack of transparency, non-compliance with internal policies, and misleading communication. This conduct represents a betrayal of trust and a failure to manage non-financial risk, leading to disappointment from both a regulatory and public perspective.
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