The Commonwealth Bank is now back in the good books of key regulator, APRA (The Australian Prudential Regulation Authority).
APRA announced Friday (the final day of the September quarter and the first quarter of the CBA’s 2022-23 financial year) that it had removed the remaining $500 million capital add-on applied to the bank four and a half years ago to address previous weaknesses in its governance, accountability and risk culture frameworks and practices.
APRA initially imposed the $1 billion capital add-on on the CBA in May 2018 as part of its response to its final report into a series of incidents that damaged the bank’s public standing. These included rorts in its finance advice and insurance businesses (the banking royal commission also exposed many of those) and its poor control and oversight of anti money laundering rules.
The report concluded that “CBA’s continued financial success dulled the senses of the institution”, particularly in relation to the management of non-financial risks. An extensive remediation plan was established to address the identified shortcomings.”
APRA halved the capital add-on was in November 2020 in recognition of CBA’s progress in addressing these issues.
APRA said at that time that the remainder would stay in place until CBA completed its full program of remediation, including addressing all recommendations from the Final Report, and APRA undertook validation work to ensure CBA’s remediations were sustainable and well-embedded.
APRA said in Friday’s statement that it was now “satisfied” that the CBA had lifted its game and had removed the remaining capital add-on, effective September 30.
