The Australian Prudential Regulation Authority published an information paper setting out the conclusions from its 2025 to early 2026 System Risk Stress Test, the first APRA stress test to span multiple regulated industries. Covering the four major banks and six large superannuation funds, the exercise found that all participating entities were able to withstand a severe hypothetical market and liquidity shock. Resilience was supported by strong and usable bank liquidity buffers, banks’ access to central bank facilities and superannuation funds’ ability to access liquidity in deep international markets. The test also showed that superannuation funds could act as a stabilising force by providing new equity capital to banks during a severe downturn even while facing stress themselves. The exercise also identified vulnerabilities that could amplify stress across the financial system. These included concentration in some banks’ reliance on superannuation funding, differing assumptions across participants about how stable superannuation-provided deposits and wholesale funding would be in a crisis, and common dependence on material service providers that could hinder liquidity and risk-management actions if disrupted. Superannuation funds’ modeled responses to liquidity stress relied mainly on selling listed equities while avoiding unlisted asset sales, leaving some members, especially in MySuper options, more exposed to liquidity, valuation and sequencing risks linked to unlisted assets. Some funds also indicated they may reduce capital injections into existing investments or limit new commitments in some unlisted markets, while banks’ modeled responses included reduced credit availability in some segments and less market lending activity. APRA also highlighted that the continued growth and maturation of the superannuation sector could increase systemic vulnerabilities through larger retirement-phase liquidity demands and greater foreign exchange risk as offshore investment rises. The findings will inform APRA’s supervisory work and proposed amendments to bank liquidity rules that are due for consultation during 2026. APRA said it will continue system-wide and exploratory stress testing across banks, superannuation funds and other regulated entities, and expects entities, particularly superannuation funds, to strengthen stress-testing capabilities and crisis preparedness.
Australian Prudential Regulation Authority2026-06-30
Australian Prudential Regulation Authority publishes first system risk stress test findings showing resilience and vulnerabilities between banks and superannuation funds
The Australian Prudential Regulation Authority’s first cross-sector System Risk Stress Test found that the four major banks and six large superannuation funds could withstand a severe hypothetical shock. The exercise also exposed vulnerabilities tied to superannuation funding concentration, inconsistent crisis assumptions and reliance on shared service providers, while highlighting the systemic role of superannuation funds. APRA said the results will inform supervision and planned 2026 consultation on changes to bank liquidity rules.