APRA reduces Westpac’s risk capital

Back in 2019, APRA imposed a $1 billion risk capital add on to the bank after higher operational risk was identified in a risk governance assessment.

Initially, $500 million was added in July 2019, with a further $500 million being added in December of the same year, reportedly to “reflect the heightened operational risk profile of the bank, primarily due to risk governance concerns.”

In response to this decision, Westpac entered a Court Enforceable Undertaking (CEU) in December 2020. This would see the bank work with APRA and an independent reviewer to remedy “weaknesses in its culture, governance and accountability, and address the root causes of these issues.”

Now, almost four years after the CEU, APRA has decided to reduce the banks risk capital add on by half to recognise the progress made, effective immediately.

APRA said in a statement: “The remaining $500 million capital add-on will remain in place until Westpac completes its transition work and APRA undertakes further validation work to assess the sustainability of improvements made in risk governance, culture and accountability practices and outcomes.”

[Related: UBS fined over $560m for Credit Suisse misconduct]

Jack Campbell is the editor of Broker Daily. After graduating from the University of Wollongong in 2022, Jack began his journalistic career working on Broker Daily’s sister brand, HR Leader. In August 2023 he was made the news editor and worked alongside some talented journalists writing articles and recording podcasts.

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