A review of the ANZ Bank New Zealand's missteps over the past year has found complacency at the most senior level, leading to the departure of its long serving chief executive.
The Reserve Bank of New Zealand ordered a review of the performance of the bank's directors in respect of attestations and assurances, which is their ability to meet reporting obligations.
The report prepared by Deloitte looked closely at inaccuracies in the reporting of former chief executive David Hisco's personal expenses, as well as the sale of a house to his wife.
The report said ANZ's integrity unit investigated Mr Hisco's expense claims in March, and found he "took actions that reduced the likelihood of the personal expenses being detected, and did not report the benefit associated with the expenses".
However, Deloitte found the sale of the house to Mr Hisco's wife had been conducted at arm's length.
While that did not mean ANZ's attestation processes were a failure, a historic miscalculation of its financial risk did.
The report found ANZ had made a "serious error" in holding less capital than required, which was in part due to its staff being reluctant to challenge the status quo.
"We believe the influence of the lack of challenge and a historically complacent approach, the absence of a comprehensive compliance plan, diffused accountability and inadequate assurance processes, all contributed to the operational risk capital breach not being identified for more than five years," the report says.
The RBNZ censured ANZ in May and ordered to increase its level of capital and reserves to cover any crisis by hundreds of millions of dollars.
The RBNZ directly blamed the ANZ's local directors for the lapse, however chair Sir John Key said the mistake was made by a junior member of staff.
"The checks and balances in place at the time should have been of a higher standard, and steps have been taken to address those shortcomings," he said.
"Regardless of the fact that there was never any impact on customers or the banking system we will improve our practices in relation to our models."
Reserve Bank Deputy Governor Geoff Bascand said ANZ's complacency was concerning.
"While we acknowledge ANZ's work over the recent months to improve its framework and the attention these matters are now receiving, more is required," he said.
"We will continue to work with ANZ on this until the Reserve Bank is satisfied that ANZ's overall approach to attestation meets our expectations."
ANZ had until June 2021 to prove it had undertaken all of Deloitte's recommendations.
The bank was due to provide another report to the RBNZ in February, regarding its compliance with the central bank's capital requirements.