Banks told to set aside extra $1.5bn
WESTPAC, NAB and ANZ have been ordered to set aside an extra $1.5 billion in capital until they have finished refunding customers for their various wrongdoings and got better at spotting risk.
The Australian Prudential Regulation Authority yesterday said it had written to Westpac, NAB and ANZ to tell them they each need to hold an extra $500 million in capital.
The instruction followed APRA’s decision in May last year to apply a $1 billion capital add-on to Commonwealth Bank in response to the findings of the APRA-initiated prudential inquiry that followed its money laundering scandal.
APRA chairman Wayne Byres yesterday said Australia’s big four banks were still falling short when it came to identifying risk, which in CBA’s case led to it breaching money-laundering laws and a $700 million fine – the largest civil penalty in Australian corporate history.
“Australia’s major banks are well-capitalised and financially sound but improvements in the management of non-financial risks are needed,” he said.
“This will require a real focus on the root causes of the issues that have been identified, including complexity, unclear accountabilities, weak incentives and cultures that have been too accepting of long-standing gaps.”
CBA’s major rivals were among 36 institutions asked by APRA to look at their own risk assessment systems in the light of a report that suggested many issues were “not unique to CBA”.
NAB, ANZ and Westpac did so and reported back to APRA, although only NAB had made its self-assessment public until Westpac did so yesterday.
Westpac’s self-assessment said some of the issues at CBA resonated with Australia’s second largest lender.
“(But) the prominent behavioural characteristics at CBA identified by the Prudential Inquiry, particularly a sense of chronic ease, complacency, and certain governance-related issues, are not similarly prominent at Westpac,” the report said.
ANZ had yet to release its self-assessment.
The big four banks have together shelled out more than $5 billion in customer remediation over the past two years in the wake of damaging revelations at the royal commission.