The Australian Prudential Regulation Authority (APRA) has determined that Westpac Banking Corporation has completed a multi-year risk transformation program required by APRA. Consequently, APRA will remove the remaining $500 million capital add-on applied to Westpac.
Following an APRA investigation in 2020, Westpac entered a Court Enforceable Undertaking (CEU) with APRA in December 2020 where it committed to remediating specific prudential weaknesses identified by APRA in its culture, governance and accountability, and address the root causes of these issues. In response, Westpac established the Customer Outcomes and Risk Excellence (CORE) Program and appointed an independent reviewer.
Prior to this, APRA had pre-emptively imposed a $500 million capital add-on on Westpac in July 2019 and an additional $500 million capital add-on in December 2019.
As APRA progressed its supervision program, a first tranche of $500 million capital add-on was removed in July 2024 in recognition of Westpac’s progress in addressing these issues. APRA indicated at the time that the remainder would stay in place until Westpac completed its transition work and APRA undertook further validation work to assess the sustainability of improvements made in prudent risk management practices and outcomes.
Satisfied that this program is complete, and the specific prudential issues identified by APRA have been addressed, APRA has removed the remaining tranche of $500 million capital add-on, with immediate effect.
APRA Member Therese McCarthy Hockey said:
“As a systemically important bank, APRA expects Westpac to hold itself to the requisite standard of prudent risk management and governance practices. Completion of this risk transformation program is a vital step in ensuring these expectations are consistently met. Our experience has shown us that effective risk transformation programs may continue to identify legacy issues, and we expect Westpac to maintain its unquestionably strong capital position”.
