APRA decided to reduce the AUD 1 billion capital add-on for the Commonwealth Bank of Australia, also known as CBA, by AUD 500 million, effective immediately. This reduction is in response to the progress of the bank in addressing concerns over its governance, accountability, and risk culture frameworks and practices.
The latest quarterly report from the Independent Reviewer indicated that the bank has made significant progress in executing the Remedial Action Plan. The work of APRA to validate the progress of bank against this plan, in areas such as risk management and compliance, remuneration, and risk culture, supports the recent assessment, although a substantial body of work is needed to ensure the improvements are fully embedded across the whole Group. APRA had imposed the capital add-on on the Commonwealth Bank of Australia in May 2018, as part of its response to the final report of the Prudential Inquiry into the Commonwealth Bank of Australia. APRA was also asked to approve a Remedial Action Plan at the time, with the bank appointing an Independent Reviewer to report quarterly on progress against the plan.
Keywords: Asia Pacific, Australia, Banking, Operational Risk, Governance, CBA, Regulatory Capital, Capital Add-On, Basel, APRA
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