Featured Product

    APRA Takes Action Against Westpac Over Breaches of Liquidity Standards

    December 03, 2020

    In a couple of recent developments, APRA granted a limited authorized deposit-taking institution license to TransferWise Australia Pty Limited and took enforcement action against Westpac Banking Corporation. The action against Westpac is in response to the material breaches of the APRA prudential standards on liquidity. The breaches, which were identified during 2019 and 2020, relate to the incorrect treatment of specific funding and loan products for calculating the liquidity coverage ratio (LCR) and net stable funding ratio (NSFR).

    Although these breaches have been rectified and do not raise concerns about the liquidity position of Westpac, APRA believes that these breaches demonstrate weaknesses in risk management and oversight, risk control frameworks, and risk culture. APRA will now require comprehensive reviews, by independent third parties, of Westpac’s compliance with the liquidity reporting requirements of APRA and the remediation of its control framework for liquidity risk management. Until the findings from the independent reviews are addressed to the satisfaction of APRA, APRA will also require Westpac to apply a 10% add-on to the net cash outflow component of its LCR calculation. In December 2019, APRA had commenced a risk governance review into Westpac and applied a $1 billion capital add-on to Westpac’s operational risk capital requirement, in response to allegations by AUSTRAC that Westpac had breached anti-money laundering laws. The review of APRA is ongoing and the capital add-on will remain in place until APRA is satisfied that deficiencies in risk governance have been adequately remediated.

    In a more recent development in the Westpac compliance assessment, APRA has concluded that Westpac has failed to deliver the expected risk governance improvements despite almost two years of remediation. This has undermined the confidence of APRA in Westpac’s ability to  remediate these weaknesses in a timely manner. Westpac has acknowledged these concerns of APRA and a recently signed Court Enforceable Undertaking (CEU) requires Westpac to:

    • Develop an integrated plan that incorporates all its major risk governance remediation programs, covering both financial and non-financial risks
    • Obtain independent assurance over the implementation of the plan with direct reporting to APRA
    • Assign accountabilities for delivery of the plan to named executives and Board members and incorporate outcomes into remuneration decisions

     

    Related Links

    Keywords: Asia Pacific, Australia, Banking, LCR, Westpac, Transferwise Australia, NSFR, Liquidity Risk, Basel, Governance, Compliance Risk, APRA

    Featured Experts
    Related Articles
    News

    ECB Amends Guideline on Temporary Collateral Easing Measures

    ECB published Guideline 2021/975, which amends Guideline ECB/2014/31, on the additional temporary measures relating to Eurosystem refinancing operations and eligibility of collateral.

    June 17, 2021 WebPage Regulatory News
    News

    EIOPA Releases Report on Artificial Intelligence Governance Principles

    EIOPA published a report, from the Consultative Expert Group on Digital Ethics, that sets out artificial intelligence governance principles for an ethical and trustworthy artificial intelligence in the insurance sector in EU.

    June 17, 2021 WebPage Regulatory News
    News

    HKMA to Increase Focus on Suptech and Regtech Cloud Adoption

    HKMA published the seventh and final issue of the Regtech Watch series, which outlines the three-year roadmap of HKMA to integrate supervisory technology, or suptech, into its processes.

    June 17, 2021 WebPage Regulatory News
    News

    EC Consults on Improving Transparency in Secondary Markets for NPLs

    EC launched a targeted consultation to improve transparency and efficiency in the secondary markets for nonperforming loans (NPLs).

    June 16, 2021 WebPage Regulatory News
    News

    BIS and Nordic Central Banks Launch Innovation Hub in Stockholm

    BIS, Danmarks Nationalbank, Central Bank of Iceland, Norges Bank, and Sveriges Riksbank launched an Innovation Hub in Stockholm, making this the fifth BIS Innovation Hub Center to be opened in the past two years.

    June 16, 2021 WebPage Regulatory News
    News

    FDIC Tech Sprint Aims to Explore Technologies to Reach Unbanked

    FDITECH, the technology lab of FDIC, announced a tech sprint that is designed to explore new technologies and techniques that would help expand the capabilities of community banks to meet the needs of unbanked individuals and households.

    June 16, 2021 WebPage Regulatory News
    News

    EC Releases Sustainable Finance Taxonomy Compass

    EC released the EU Taxonomy Compass, which visually represents the contents of the EU Taxonomy starting with the EU Taxonomy Climate Delegated Act.

    June 16, 2021 WebPage Regulatory News
    News

    FDIC Proposes Amendments to Real Estate Lending Standards

    FDIC is seeking comments on a rule to amend the interagency guidelines for real estate lending policies—also known as the Real Estate Lending Standards.

    June 15, 2021 WebPage Regulatory News
    News

    EIOPA to Consider Liquidity Risk in Stress Test for 2021

    EIOPA published its annual report, which sets out the work done in 2020 and indicates the planned work areas for the coming months.

    June 15, 2021 WebPage Regulatory News
    News

    ESRB Paper Discusses Measurement of Impact of Bank Failure via Lending

    The ESRB paper that presents an analytical framework that assesses and quantifies the potential impact of a bank failure on the real economy through the lending function.

    June 15, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7116