Australian Regulator Adds A$250 Million to ANZ's Capital Adequacy Requirements

By Alice Uribe

SYDNEY--Australia's prudential regulator will require ANZ Group Holdings to have an additional operational risk capital overlay of 250 million Australian dollars in response to heightened concerns about the bank's non-financial risk management practices.

This brings the capital add-on applied to ANZ to A$750 million, the Australian Prudential Regulation Authority said Friday.

"APRA has held longstanding concerns with ANZ's non-financial risk management, and imposed a A$500 million operational risk capital add-on to the bank in 2019 to reflect deficiencies in its risk governance," the regulator said.

The latest add-on comes after several issues emerging in the bank's Markets business increased APRA's concerns, it said.

"ANZ has admitted that it misreported bond trading data to the Australian Office of Financial Management in 2022-23, and that action has been taken in response to poor behavior by employees in its Markets business," APRA said.

In response, ANZ noted APRA's comments confirming ANZ is financially strong with strong capital and liquidity level, adding that the impact of the additional operational risk overlay of A$250 million is 6 basis points of Common Equity Tier 1 capital.

"ANZ acknowledges APRA's concerns and is expediting work already under way to address the issues raised," the lender said.

The capital add-on will remain in place until such time as ANZ has delivered required remediation to APRA's satisfaction, the regulator said.

Write to Alice Uribe at alice.uribe@wsj.com

(END) Dow Jones Newswires

August 22, 2024 20:12 ET (00:12 GMT)

Copyright (c) 2024 Dow Jones & Company, Inc.