Banking major will conduct in independent review into 'persistent weaknesses' in risk management
Australian financial regulator the Australian Prudential Regulation Authority (APRA) has welcomed measures taken by ANZ to address weaknesses in the Big Four bank’s risk-management practices.
Following long-standing concerns expressed by APRA around ANZ’s operational risk and compliance management and its “reactive risk culture”, the major has agreed to appoint an independent reviewer to audit its non-financial risk-management practices.
The reviewer is tasked with finding the root causes and behavioural drivers of what APRA calls “persistent weaknesses” in the bank’s practices.
ANZ has also agreed to develop a comprehensive remediation plan to address the root causes that emerge, overseen by an independent reviewer.
ANZ will also provide written attestation reports to APRA detailing the implementation of the remediation activities.
APRA has also increased the amount of spare cash ANZ must keep aside as a risk measure. Called a ‘capital add-on’, it has been increased from $750m to $1bn.
The regulator’s chair John Lonsdale (pictured) said in a press statement: “ANZ remains financially sound with robust levels of capital and liquidity, however problems with the bank’s management of non-financial risks are persistent and prevalent across the bank.
“APRA has seen how long-standing non-financial risk management weaknesses have manifested in material prudential issues at some of ANZ’s peer banks. We have observed some similar weaknesses at ANZ and require these to be addressed as a priority.”
APRA has been particularly critical of ANZ’s Global Markets business, having cited “serious issues” around employee conduct within the department last August.
