APRA Penalizes Macquarie Bank for Breaches of Regulatory Standards
APRA has increased liquidity and operational risk capital requirements of Macquarie Bank Limited, in response to multiple material breaches of the prudential and reporting standards set by APRA. The enforcement action relates to the incorrect treatment of specific intra-group funding arrangements for calculating capital and related entity exposure metrics as well as multiple breaches of reporting standards on liquidity between 2018 and 2020. These resulted from deficiencies in Macquarie Bank’s ability to manage the operational risk inherent in the complex intra-group structure, within which it transacts with its related entities. The increases in the capital and liquidity requirements of Macquarie Bank will take effect from April 01, 2021.
The breaches are historical and do not impact on the overall soundness of Macquarie Group’s capital or liquidity positions. However, they raise serious questions about the bank’s risk management practices and ability to calculate and report key prudential ratios. As a consequence of the breaches, APRA will require:
- Macquarie Bank to hold an operational capital overlay of $500 million, reflecting deficiencies in its management of operational risk inherent in the bank’s intra-group structure
- 15% add-on to the net cash outflow component of its liquidity coverage ratio calculation
- 1% adjustment to the available stable funding component of the net stable funding ratio calculation
In addition, APRA will require Macquarie Bank to resubmit and restate selected regulatory returns. APRA will also subject Macquarie Bank to intensified supervision to address the bank’s persistent difficulties in complying with its prudential obligations. Further action is also possible as more information comes to light about the root causes of these breaches. The APRA Deputy Chair John Lonsdale said, "For one of the country’s largest financial institutions to have committed breaches of this nature is disappointing and unacceptable."
Related Link: Media Release
Keywords: Asia Pacific, Australia, Banking, Basel, Liquidity Risk, Reporting, LCR, NSFR, Regulatory Capital, Macquarie Bank, Enforcement Action, APRA
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Patrycja Oleksza
Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area
Next Article
BOG Becomes Member of Basel Consultative GroupRelated Articles
EBA Publishes Final Regulatory Standards on STS Securitizations
The European Banking Authority (EBA) published the final draft regulatory technical standards specifying and, where relevant, calibrating the minimum performance-related triggers for simple.
ECB Further Reviews Costs and Benefits Associated with IReF
The European Central Bank (ECB) is undertaking the integrated reporting framework (IReF) project to integrate statistical requirements for banks into a standardized reporting framework that would be applicable across the euro area and adopted by authorities in other EU member states.
EBA Publishes Funding Plans Report, Receives EMAS Certification
The European Banking Authority (EBA) has been awarded the top European Standard for its environmental performance under the European Eco-Management and Audit Scheme (EMAS).
MAS Launches SaaS Solution to Simplify Listed Entity ESG Disclosures
The Monetary Authority of Singapore (MAS) set out the Financial Services Industry Transformation Map 2025 and, in collaboration with the SGX Group, launched ESGenome.
BCBS to Finalize Crypto Rules by End-2022; US to Propose Basel 3 Rules
The Basel Committee on Banking Supervision met, shortly after a gathering of the Group of Central Bank Governors and Heads of Supervision (GHOS), the oversight body of BCBS.
IOSCO Welcomes Work on Sustainability-Related Corporate Reporting
The International Organization of Securities Commissions (IOSCO) welcomed the work of the international audit and assurance standard setters—the International Auditing and Assurance Standards Board (IAASB)
BoE Allows One-Day Delay in Statistical Data Submissions by Banks
The Bank of England (BoE) published a Statistical Notice (2022/18), which informs that due to the Bank Holiday granted for Her Majesty Queen Elizabeth II’s State Funeral on Monday September 19, 2022.
ACPR Amends Reporting Module Timelines Under EBA Framework 3.2
The French Prudential Control and Resolution Authority (ACPR) announced that the European Banking Authority (EBA) has updated its filing rules and the implementation dates for certain modules of the EBA reporting framework 3.2.
ECB Paper Discusses Disclosure of Climate Risks by Credit Agencies
The European Central Bank (ECB) published a paper that examines how credit rating agencies accepted by the Eurosystem, as part of the Eurosystem Credit Assessment Framework (ECAF)
APRA to Modernize Prudential Architecture, Reduces Liquidity Facility
The Australian Prudential Regulation Authority (APRA) announced reduction in the aggregate Committed Liquidity Facility (CLF) for authorized deposit-taking entities to ~USD 33 billion on September 01, 2022.
