Money: APRA forces NAB, Westpac, ANZ to hold extra $500m each in capital due to culture, governance concerns - PressFrom - Australia
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MoneyAPRA forces NAB, Westpac, ANZ to hold extra $500m each in capital due to culture, governance concerns

03:50  12 july  2019
03:50  12 july  2019 Source:   smh.com.au

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The financial regulator will force National Australia Bank , Westpac and ANZ Bank to each hold an extra $ 500 million in capital due to problems with their governance and culture . The Australian Prudential Regulation Authority ( APRA ) on Thursday said it was slapping on the extra capital

The profit before people culture resulted in the financial institutions adopting aggressive sales tactics using In lockstep, the prudential regulator on Thursday also issued a statement saying it would force ANZ , Westpac and NAB to hold an extra $ 500 million each in capital to improve their risk APRA .

APRA forces NAB, Westpac, ANZ to hold extra $500m each in capital due to culture, governance concerns© Louis Douvis APRA chairman Wayne Byres says more improvement is needed NAB, ANZ and Westpac. The financial regulator will force National Australia Bank, Westpac and ANZ Bank to each hold an extra $500 million in capital due to problems with their governance and culture.

The Australian Prudential Regulation Authority (APRA) on Thursday said it was slapping on the extra capital requirement in response to the bank's "self-assessments" of how they managed "non-financial risks."

The banks were ordered to carry out the assessments after a similar exercise at scandal-plagued  Commonwealth Bank saw it get hit with a $1 billion capital charge last year.

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Last year Apra ordered Commonwealth Bank of Australia to hold an additional Abn in capital following a scathing report by the regulator on the culture and governance at Australia ’s largest bank by assets. This followed a series of scandals at CBA, including multiple breaches of money laundering

APRA forces NAB , Westpac , ANZ to hold extra $ 500 m each in capital due to culture , governance concerns – The SMH. Deeming rates explained: What they are, how they cut pensions and why we have them – ABC. NAB warns tax cuts won’t deliver much economic boost – ABC.

The additional charge for "operational risk," which will likely weigh on returns, will be kept in place until the banks complete their plans to strengthen their management of "non-financial risks" and close gaps identified in the self-assessments. APRA is not releasing the self-assessments, though NAB has made its public.

By late morning, ANZ shares were down 0.6 per cent, Westpac shares had slipped 0.2 per cent, and NAB shares were up 0.2 per cent. CBA shares were 4c or 0.05 per cent higher at $81.29.

APRA said the self-assessments, which 36 of the country's biggest banks, insurers and superannuation funds were required to conduct, did not raise any concerns about these institutions' financial soundness.

But the regulator did find that many of the problems at CBA - which was found to be too insular, among other harsh criticisms - were not unique to it.

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The prudential regulator will force Westpac , ANZ and National Australia Bank to hold an additional $ 500 million in capital to reflect the risks identified in their culture and governance self assessments. APRA chairman Wayne Byres has criticised the banks over their cultural reviews.

Westpac , NAB and ANZ have been told to set aside $ 500 million in additional capital until they have APRA has told three of the country's big four banks to set aside an extra $ 500 million each until " APRA expects (the banks ) to hold themselves to the highest standards of risk governance

“Australia’s major banks are well-capitalised and financially sound, but improvements in the management of non-financial risks are needed. 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," APRA chairman Wayne Byres said.

“The major banks play a vital role in the stability of the entire financial system, and APRA expects them to hold themselves to the highest standards of risk governance. Their self-assessments reveal that they have fallen short in a number of areas, and APRA is therefore raising their regulatory capital requirements until weaknesses have been fully remediated,” Mr Byres said.

ANZ Bank told investors that the lift in its capital requirement would lower its tier 1 capital ratio, a key gauge of strength, by 18 basis points.

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Westpac has finally released its culture and governance self assessment following the announcement of APRA 's .5 billion culture hit. If ANZ wants to help lead the restoration of trust in the banking sector, then simply telling investors and the community that it is making progress on improving its

Westpac , NAB and ANZ have each been told to set aside $ 500 million in additional capital until The extra capital requirements are expected to reduce Westpac 's level 2 common equity Tier 1 capital In July 2017, APRA raised the amount of top quality capital the banks must hold to 10.5 per cent by

Westpac said the change would reduce its tier 1 capital ratio, which was most recently 10.64 per cent  of risk-weighted assets, by 16 basis points.

Chief executive Brian Hartzer said: "We acknowledge the need to improve non-financial risk management andoversight and we are working to resolve the issues raised. Our Board and senior executives are committed to addressing the shortfalls identified in the report and will continue to provide regular updates on our progress.”

NAB said the capital charge would lower its common equity tier 1 capital ratio by 16 basis points. Acting chief executive  Phil Chronican said the bank, which released its self-assessment last year, was working on implementing the report's recommendations in order to "accelerate and drive far-reaching change."

For example, he said the bank had improved how it compensated customers, paying out $170 million in the year to June, and it had reduced aged small business complaints by 50 per cent since last October.

“The board and executive leadership team take the findings seriously and we are moving forward with rigour and discipline to change the way we operate," Mr Chronican.

How you could be owed BIG money: Major Australian bank is ordered to pay tens of millions of dollars to its customers who were hit with incorrect charges.
The error left many customers continuing to pay interest only loans long after the agreed upon period when they should have been switched over to a principal and interest loan.

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