Australian Prudential Regulation Authority accepts enforceable undertaking from ANZ over non-financial risk weaknesses and increases capital add-on to AUD 1 billion

The Australian Prudential Regulation Authority (APRA) has accepted a Court Enforceable Undertaking (CEU) from Australia and New Zealand Banking Group (ANZ) to address persistent weaknesses in the bank’s non-financial risk management practices and risk culture, and has increased ANZ’s capital add-on from AUD 750 million to AUD 1 billion. APRA linked the action to long-standing concerns including weaknesses in operational risk and compliance management and a reactive risk culture, noting that these issues remain prevalent across the bank despite ongoing supervisory engagement and remediation work. The move follows measures announced in August 2024 after serious employee conduct and non-financial risk management issues emerged in ANZ’s Global Markets business and APRA required an independent review, which identified root causes of risk governance shortcomings and cautioned that similar issues may exist in other parts of the bank. APRA also assessed that completing ANZ’s existing multi-year program to implement a group-wide non-financial risk management framework, system and operating model would not, on its own, sustainably address the broader weaknesses. Under the CEU, ANZ must commission an independent group-wide root cause and behavioural drivers review with a gap analysis against current or planned remediation, develop a comprehensive remediation plan, obtain independent assurance over execution, and provide written attestations from relevant accountable persons and board committee chairs once remediation is complete and target states are substantially achieved. ANZ must also embed delivery accountabilities in Financial Accountability Regime accountability statements and remuneration scorecards, and the AUD 1 billion capital add-on will remain until APRA is satisfied with delivery of the required remediation.