But Key said the heart of the issue was the way the expenditure was recognised in its books.
"It was either in our view mischaracterised or there was a lack of transparency. Not the money itself but the way it was recognised in the ANZ books."
It looked like a business expense when it was a personal expense, Key said.
"We as an organisation and the New Zealand board and me as chairman expect transparency from not only our CEO but every person that works for this company.
"We have to be able to have trust in what people are recognising in our records.
"In that regard David would say he didn't meet the standards he set for himself and the rest of his staff."
Max Whitehead, a human relations consultant, said disputes over expenses were common in corporates but where this differed was the amount of money involved.
He said top level executives like Hisco were typically awarded a "carte blanche" approach to expenses but there now appeared to be a difference in what was seen as appropriate by the company.
Whitehead said the difference in views left vulnerabilities on both sides which opened it up for legal action.
"It will probably end up in a massive legal fight," he predicted.
Whitehead said it was likely that mediation and discussions had already taken place to try to resolve the issues and that had broken down.
However, he said the damage had already been done to Hisco as his reputation was now tarnished and he would not be able to work in banking again.
"There is a lot at stake here. Loss of future earnings will be what he will be considering here."
An ANZ spokesman said it was not aware of any legal action from Hisco and Hisco was uncontactable by the Herald today.
Hisco is believed to be overseas recuperating from health issues which initially saw him take extended leave from the bank at the end of May.
Hisco will leave with his contracted and statutory entitlements to notice and untaken leave but has had to forfeit unvested equity worth around $6.4 million.
That will be a painful situation for the career banker who had been chief executive in New Zealand since 2010 and has had 39 years with the ANZ.
Industry experts say Hisco, who was New Zealand's longest serving bank boss, would likely have retired soon but no doubt would have preferred to go out on his own terms and on a positive note.
Cameron Bagrie, former chief economist at the ANZ, said the forfeiture of the $6.4m in equity was massive.
"That is sending a very big message to senior executives across the banking sector in regards to how significant behaviour and culture is."
The culture and conduct of all the banks has been under the spotlight in the last year in the wake of Australia's Royal Commission into misconduct in the financial services sector and investigations by New Zealand regulators the Reserve Bank and the Financial Markets Authority.
The Government put the banks on notice in November after a report by the regulators found "significant weaknesses" in the way New Zealand banks govern and manage conduct risks, and changes needed to be made.
ANZ was also publicly censured by the Reserve Bank last month and had its accreditation to model its own operational risk capital requirement revoked due to a "persistent failure" in its controls and attestation process.
Key said the anomalies in Hisco's expenses had come to light three months ago following a review that ANZ Group CEO Shayne Elliott undertook of some members of his executive committee.
"At that stage we weren't aware what that all meant - there could have been plausible explanations for that."
Then the banks' integrity team investigated further.
A spokesman for the Reserve Bank said as soon as the ANZ New Zealand board became aware of the issue they took responsibility for the matter.
"The ANZ Bank informed the Reserve Bank late on 29 May. The Reserve Bank has been kept constructively informed."
ANZ staff were told Hisco was taking extended leave for health reasons on May 30 but his departure was not announced until today.
Asked why there was a delay in telling the Reserve Bank and announcing Hisco was leaving an ANZ spokesman said it was because its review was "ongoing" and had been complicated by Hisco's medical leave.
Key said the timing of the health issues and spending findings had been pretty similar.
"He genuinely has some health issues. They sit alongside this issue.
"Things were pretty similar in terms of timing - some of these health issues he had been working through and they had been there for quite some time."
"I have no doubt the stress of this situation added to this. But he does have some genuine health issues."
Key said Hisco's departure was not linked to the ANZ's censure of its capital calculations.
"They are very separate issues. David would say if he was here today, he would take some responsibility for that as CEO of the organisation. But they are quite separate issues".
In a short note sent to staff Hisco thanked the staff and his wife for their support and revealed he had become a New Zealand citizen in 2016.
"Whilst my family and I were proud to become NZ citizens in 2016, we continue to learn about NZ and its unique culture.
"It is a beautiful country and its people are humble and welcoming. It's the place we now call home and I look forward to resting and recharging before moving forward."
Hisco said he was proud of his nine years at the bank but said he "must accept accountability for not meeting the standards expected" of him.
"What I will remember most is our wonderful and dedicated staff who backed our plan to do the National Bank merger and who have helped take ANZ in New Zealand to new heights."
