Australian regulator asks banks to increase their capital against governance risks

Australia's prudential regulator forces three of the country's largest banks to each hold $ 500 million in additional capital ($ 348 million) due to cultural and governance risks identified in a series of audits self-badessment.

The Australian Prudential Regulator announced Thursday that additional minimum funds would be imposed on Westpac, ANZ Bank and National Australia Bank until they strengthened the risk management systems and weaknesses identified during audits, which have been examined by the regulator.

"The big Australian banks are well capitalized and financially sound, but improved non-financial risk management is needed," said Wayne Byres, president of Apra.

"This will require a real focus on the root causes of the problems identified, including complexity, unclear responsibilities, weak incentives and cultures that have long accepted long-standing gaps."

Last year, Apra ordered the Commonwealth Bank of Australia to hold $ 1 billion in additional capital following a scathing report by the culture and governance regulator of the largest bank Australia.

This followed a series of scandals at the CBA, including multiple violations of money laundering and terrorist financing regulations, and evidence that the bank had scammed customers, revealed by an investigation by the Royal Commission on Money Laundering. misconduct in the financial sector.

As a result of the CBA's investigation, Apra wrote to the boards of 36 of Australia's largest banks, insurers and pension funds asking them to determine if they had similar weaknesses. Apra said the self-badessments did not raise any concerns about financial strength, but confirmed that many of the issues identified in the survey were not unique to the ABC.

"This included the need to strengthen the management of non-financial risks, to ensure that responsibilities are clear, cascaded and applied, to address persistent weaknesses and to strengthen the risk culture," said Apra in a statement. .

Westpac, ANZ and NAB were not immediately available for comment.