APRA Initiates Action Against a Bank for Liquidity Compliance Breach
APRA announced that it has increased the minimum liquidity requirement of Bendigo and Adelaide Bank for failing to comply with the prudential standard on liquidity. Bendigo and Adelaide Bank informed APRA in September of multiple breaches of APS 210, stemming from IT coding that incorrectly classified some retail deposits in the most stable category of the Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR).The breaches, while material, do not impact the overall soundness of the current liquidity position of the bank. However, they raise questions over the bank’s past risk management practices and ability to accurately calculate and report its liquidity ratios.
The breaches of APS 210 on liquidity are historical in nature and the current liquidity position of bank is comfortably above the minimum regulatory requirements of APRA. To address these concerns, APRA will require a comprehensive review by an independent third party into the bank's adherence to the liquidity requirements of APRA. APRA will require the bank to apply a 10% add-on to the net cash outflow component of its LCR calculation, which will remain in place until the independent review is finalized and shortcomings have been rectified to the satisfaction of APRA. APRA will also require the restatement of relevant disclosures under APS 330 on public disclosure, for the preceding 24-month disclosure period. APRA will wait for the outcome of an internal Bendigo and Adelaide Bank review before determining whether further action is required. APRA Deputy Chair John Lonsdale said, “In taking these actions, our priority is to ensure the underlying causes of the compliance failures are properly identified and addressed. It also sends a message to the wider banking industry that such breaches of our prudential standards are not acceptable, and APRA will respond in a commensurate manner, including applying penalties where appropriate.”
Related Links
Keywords: Asia Pacific, Australia, Banking, Liquidity Risk, APS 210, LCR, NSFR, APS 330, Bendigo and Adelaide Bank, Disclosures, Basel, APRA
Featured Experts

María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer

Pierre-Etienne Chabanel
Brings expertise in technology and software solutions around banking regulation, whether deployed on-premises or in the cloud.

Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Related Articles
EU Amends CRD4 and CRD5 as Part of Capital Markets Recovery Package
EU published Directive 2021/338, which amends the Markets in Financial Instruments Directive (MiFID) II and the Capital Requirements Directives (CRD 4 and 5) to facilitate recovery from the COVID-19 crisis.
EU Committee Recommends Systemic Risk Buffer of 4.5% in Norway
The Standing Committee of the European Free Trade Association (EFTA) recommended that a systemic risk buffer level of 4.5% for domestic exposures can be considered appropriate for addressing the identified systemic risks to the stability of the financial system in Norway.
PRA Clarifies Approach to Onshoring of Credit Risk Rules for UK Banks
In a recent statement, PRA clarified its approach to the application of certain EU regulatory technical standards and EBA guidelines on standardized and internal ratings-based approaches to credit risk, following the end of the Brexit transition.
FSB Sets Out Work Priorities for 2021
In a recently published letter addressed to the G20 finance ministers and central bank governors, the FSB Chair Randal K. Quarles has set out the key FSB priorities for 2021.
EU Publishes Corrigendum to Revised Capital Requirements Regulation
EU published, in the Official Journal of the European Union, a corrigendum to the revised Capital Requirements Regulation (CRR2 or Regulation 2019/876).
ESAs Issue Statement on Application of Sustainability Disclosures Rule
ESAs published a joint supervisory statement on the effective and consistent application and on national supervision of the regulation on sustainability-related disclosures in the financial services sector (SFDR).
EC Consults on Crisis Management and Deposit Insurance Frameworks
EC published a public consultation on the review of crisis management and deposit insurance frameworks in EU.
HKMA Enhances Loan Guarantee Scheme to Alleviate Pressure on SMEs
HKMA announced that enhancements will be made to the Special 100% Loan Guarantee of the SME Financing Guarantee Scheme (SFGS) and the application period will be extended to December 31, 2021.
EBA Proposes Standards for Supervisory Cooperation Under IFD
EBA launched consultations on the regulatory and implementing technical standards on cooperation and information exchange between competent authorities involved in prudential supervision of investment firms.
BoE Addresses Banks in Scope of First Resolvability Assessment
BoE issued a letter to the CEOs of eight major UK banks that are in scope of the first Resolvability Assessment Framework (RAF) reporting and disclosure cycle.