APRA released an information paper detailing the findings from its review of the implementation of the Banking Executive Accountability Regime (BEAR) by three of the largest authorized deposit-taking institutions in Australia. The information paper shares entity-specific observations and examples of better practiced identified in the review as part of the APRA strategy to transform governance, risk culture, remuneration, and accountability (GCRA) across all regulated entities. APRA completed the implementation review of the BEAR at Australia and New Zealand Banking Group Limited (ANZ), the Commonwealth Bank of Australia (CBA), and the National Australia Bank (NAB) in February 2020. Westpac Banking Corporation, however, was not included due to an ongoing investigation into potential breaches of the Banking Act 1959.
As at February 2020, APRA has considered that CBA had the most developed approach to implement the BEAR, but that all of the authorized deposit-taking institutions had further work to achieve clearer and more transparent accountability practices. All of the authorized deposit-taking institutions have taken actions and made commitments to address the feedback received. This includes actions and commitments to increase support for implementation of the BEAR, to enhance the use of scenario testing to clarify roles and responsibilities, and to further integrate their breach and consequence management framework with their remuneration frameworks. APRA will assess the effectiveness of these actions and outcomes and will continue to monitor progress through its ongoing supervisory activities. The BEAR is a key regulatory lever for APRA to drive action from authorized deposit-taking institutions and accountable persons. Overall, the APRA review found that all three of the large authorized deposit-taking institutions had designed adequate frameworks to implement the BEAR and that this has helped to deliver the following:
- Greater clarity and transparency of individual accountabilities at authorized deposit-taking institutions
- Sharpened challenge by boards on actions taken by accountable persons to meet their obligations
- More targeted engagement between APRA and authorized deposit-taking institutions to deliver prudential outcomes
Keywords: Asia Pacific, Australia, Banking, BEAR, GCRA, Governance, Operational Risk, Basel, ANZ, NAB, APRA
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