"THIS is a very small part of the business that got out of hand, and it's now being fixed."
The comment, made towards the end of yesterday's press briefing, is the message the chief executive of ANZ, Mike Smith, wants people to take away from yesterday's report on its exposure to the margin lending debacle.
For those who don't get the message, here's a translation. "Got out of hand" is short for "staff in our securities lending unit didn't fully understand the business they were running and our risk management was either non-existent or badly implemented".
"Small part of the business" translates to "don't worry, the other 99.9 per cent of the business bears no resemblance to the disaster area we have revealed here".
Heaven help them if the rest of the bank is run anything like this.
The real fun bit is explaining why the CEO, board and auditor bear no responsibility for failing to pick up on this ticking time bomb.
These three layers of oversight are not expected to poke into the affairs of a business that provided a relatively minute $10 million in earnings to a bank that is expected to report a $3 billion profit this year.
This is probably the biggest indictment. At least the global banks being savaged by now-toxic collateralised debt obligations (CDOs) had the promise of big returns.
The message is someone really screwed up - but not the board, and not ANZ's current and former CEOs. The buck stops with ANZ's chief risk officer, and head of its institutional banking business, who apparently didn't alert Smith - or John Macfarlane before him - to the dangers.
And with Smith still a relative cleanskin, the pressure is expected to build on the ANZ chairman, Charles Goode, who has already been too long in the job for many investors' liking.
This is one of the issues on which ANZ refused to comment yesterday but which will keep festering.
One of the more interesting findings in the report covered ANZ's relationship with the brokers.
"The review committee did not identify any evidence to suggest that any personal relationships between ANZ staff and specific brokers contributed to the issues of concern relating to the equities finance business."
Never mind that the elusive head of Opes, Laurie Emini, was a former ANZ employee who worked with, and was friends with, staff in ANZ's securities lending unit. ANZ could be forgiven for being a little disingenuous on this point.
Legal action by Opes clients claim the broker was "recklessly indifferent with the truth" in its representations to them and their understanding of the risks involved with the margin-lending agreements they signed.
ANZ, which ended up with the shares, is quarantined from this by the fact its relationship is with Opes rather than the clients.
If the misrepresentations are proven, and Emini's friends at ANZ knew of them, it's a whole new ball game for ANZ.
