Bendigo Bank flags terrorist financing, money laundering failures after Deloitte review

Regional lender Bendigo Bank has told investors a review by consultants Deloitte found it may have breached anti-money laundering and counter terrorist financing rules for the last six years.

In an announcement to the ASX on Tuesday morning, Bendigo Bank said Deloitte’s review initially focused on a single branch after the bank identified and reported potential money laundering issues. However, Deloitte’s final report warned that there may have been serious customer identification, transaction reporting and terrorism financing-related failings across the entire bank.

“The board is very disappointed with the findings and is fully committed to ensuring that the Bank undertakes the necessary enhancements to its systems, processes and frameworks to ensure it is fully compliant with its obligations under the Anti-Money Laundering and Counter Terrorism Financing Act 2006,” the statement said.

“The Board has committed to fully funding the uplift program to address all deficiencies identified in the Deloitte review.

“While the final outcomes (including costs) are unknown at this stage, the Bank will keep the market informed in line with its continuous disclosure obligations. The Bank will continue to engage constructively with AUSTRAC, APRA and ASIC in relation to this matter.”

Shares sink on red day for banks

Shares in the bank tumbled 8 per cent to $10.11 on Tuesday lunchtime and have now lost 22.6 per cent in 2025.

Broker Citi said investors were likely selling the stock due to uncertainty around what actions regulators may take in the future and the extent of any remediation action needed.

“The company is due to hold an investor day next week,” Citi said. “But we expect that may be too early for management to put definitive numbers around an uplift program. This potentially complicates the messaging, as productivity is a key pillar of the bank’s aspiration to improve returns, but today’s announcement highlights that investment and compliance pressures will persist for Bendigo Bank and the sector.”

In its announcement, Bendigo Bank warned the costs of the remediation are unknown and said it will keep in contact with anti-money laundering regulator AUSTRAC and financial services enforcer ASIC.

Citi added that the broader banking sector has a poor track record on anti-money laundering and suspicious transaction reporting obligations.

“While it is too early and we do not have sufficient detail to speculate what sort of regulatory response and remedial plan these findings might invite, it is likely that the uncertainty will weigh on the shares until further clarity can be delivered,” Citi said.

The broker stuck to its sell rating on the bank’s shares and a price target of $11.

Elsewhere, analysts at Macquarie estimated the bill to fix the problems could finalise between $30 million and $70 million, which could equal between 4 and 10 per cent of the bank’s profits.

Over the 12 months ending June 30, 2025 the bank posted a cash profit down 8.4 per cent to $514.6 million as it faced a competitive home and business lending market that has pressured the profit margins of most local banks.

All of the share market’s big four banks of National Australia Bank, Commonwealth Bank, ANZ Bank, and Westpac were lower on Tuesday afternoon, putting pressure on Australia’s benchmark S&P/ASX 200 share index, which was down 0.2 per cent.