In a statement, the bank said it had parted ways with Hisco due to boardroom concerns about "the characterisation of certain transactions" following the review into his expenses account.
At a press conference on Monday, ANZ revealed the expenses included tens of thousands of dollars on corporate chauffeur cars, and wine storage.
It comes after the bank said Hisco would take "extended sick leave" last month due to unspecified health concerns. ANZ said "ongoing health issues" were another reason for Hisco's permanent departure.
The bank said: "While Mr Hisco does not accept all of the concerns raised by the Board, he accepts accountability given his leadership position and agrees the characterisation of the expenses falls short of the standards required."
ANZ said Hisco will receive his "contracted and statutory entitlements" to notice and untaken leave, but added "unvested equity" would forfeit. It is believed the forfeited shares are worth $6.4 million.
Hisco's departure over the expenses scandal comes during a period of turmoil for the bank. In May, ANZ was heavily censured by the Reserve Bank over capital modelling failings, a move which has forced the lender to keep an extra $277 million in risk capital.
ANZ chairman and former Prime Minister Sir John Key has faced calls to resign over the capital modelling failings, and is likely to come under further pressure over the nature of Hisco's sudden departure.
Key said the bank was "disappointed David is leaving ANZ under such circumstances after such a long career". He added the departure "is the right one in these circumstances given the expectations we have of all our people, no matter how senior or junior".
For now, Hisco is to be replaced by Antonia Watson, the former ANZ New Zealand retail and business banking head, who has held the role of Acting New Zealand CEO since May.
Key said ANZ would search for a permanent replacement for Hisco.
“We are fortunate to have an experienced executive in Antonia Watson to step in while we conduct a search for a replacement. Antonia’s extensive banking career has her well placed to help ANZ manage through this transition,” he said.