The largest lender in New Zealand said David Hisco, chief executive officer of the unit since 2010 and an employee since the 1990s, logged payments for chauffeurs and wine storage as business expenses rather than personal.
Unit chairman and ex-New Zealand Prime Minister John Key at a news conference said Hisco did not share ANZ's conclusions as he "was adamant he had the authority for the expenditure" but nevertheless agreed to leave the bank immediately.
"He believed he had authority to do that for reasons of being an expat and the nature of some discussions he'd had with executives in Australia," Key said. "We accept that, but what we don't accept is the way they were recorded in our accounts."
Hisco did not respond to a Reuters request for comment sent to his LinkedIn page.
His departure demonstrates how one of Australia's biggest banks is taking a zero-tolerance approach to compliance after a Royal Commission inquiry exposed industry-wide misconduct and brought accusations of profiteering from branch to boardroom.
Also at the inquiry, accusations of ineffectiveness were levelled at the Australian Securities and Investments Commission which has since installed representatives at bank head offices.
"These decisions can be strong symbolic signals to regulators that they are changing," said Warren Staples, a business ethics and corporate governance academic at RMIT University in Melbourne.
"The executive level in the banks are cognizant that the eyes of the investment and regulatory community are on them."
The departure is an additional headache for ANZ's New Zealand unit which a month earlier had its licence revoked to calculate its own operational risk capital due to "persistent" control failures.
Key said the expenses Hisco claimed for about nine years ran into tens of thousands of dollars. He said as the matter was more about the mischaracterisation of transactions than authority, Hisco would not be required to return the funds.
"His departure demonstrates that when people do not do the right thing we hold them to account no matter the status or position in the organisation," Key said.
In a statement, ANZ also said Hisco's departure followed health issues, without detailing those issues.
He will receive his contracted and statutory entitlements but has forfeited rights to about NZ$6.4 million ($4.2 million) in equity, Key said.
Antonia Watson will become acting chief executive, ANZ said.
(Reporting by Praveen Menon in Wellington and Paulina Duran in Sydney; Additional reporting by Nikhil Kurian Nainan in Bengaluru; Editing by Peter Cooney and Christopher Cushing)
By Praveen Menon and Paulina Duran