ANZ chairman David Gonski regrets that public concern about big banks' behaviour was allowed to escalate to the point that a royal commission became necessary to restore confidence in the industry.
The bank had previously believed a royal commission was unnecessary, but political debate over the industry's misconduct has had a negative impact on confidence in the financial system and the economy, Mr Gonski told ANZ's annual general meeting.
"That confidence is vital to the long term wellbeing of all of us," he said.
"Whatever we might have thought about the need for a royal commission, its cost and potential outcomes, we acknowledge that significant concerns exist among some customers and parts of the community about mis-selling and conduct in the financial services industry."
Mr Gonski said ANZ does not underestimate how challenging the royal commission will be for the bank and the industry.
Chief executive Shayne Elliott said restoring trust and confidence would help a financial industry that needs to "radically re-think" its relationship with customers, communities and governments.
"The breakdown in these relationships has driven higher capital, tighter liquidity requirements, and now a new bank tax," Mr Elliott said.
Left unmanaged, those changes could reduce the industry's return on equity by about three per cent and result in lower shareholder dividends, he said.
"We need a strong and inclusive conversation about how we adapt, embrace opportunity and continue to prosper for the benefit of all members of our society," Mr Elliott said.
Mr Gonski reaffirmed that ANZ is considering returning surplus capital to its shareholders, following the sale of 16 business divisions over the past two years, including the recent $2.85 billion sale of its life insurance business to Swiss giant Zurich.
ANZ announced an on-market share buyback of $1.5 billion on Monday, following the completion of the sale of its 20 per cent stake in Shanghai Rural Commercial Bank, which was announced in January.
Analysts expect the buyback is just the first step in an ongoing capital management plan to return excess capital to shareholders.
Mr Gonski said the sale of ANZ's life insurance arm should provide the bank with "flexibility" to consider further capital management initiatives in the future.
"Further capital management initiatives will only be undertaken while ensuring sufficient capital is available to support growth as well as being subject to business conditions and regulatory approval, after the actual receipt of the relevant sale proceeds," he said.
