ANZ Banking Group’s ongoing problems with the regulator continue: APRA imposed an additional capital buffer of $250 million – on top of the $500 million already imposed in 2019 – after finding that the four big banks’ risk management controls had not been sufficiently improved.

In a statement today, APRA raised “long-standing concerns about ANZ’s non-financial risk management,” particularly targeting the company’s markets division.

The additional capital buffer of $250 million reflects ongoing concerns about “deficiencies” observed by APRA in the bank’s risk management processes – despite the bank’s implementation of a formal recovery program.

“Although this program has been in place for several years, APRA has not yet seen any significant improvements in ANZ’s non-financial risk management,” the regulator said.

The additional capital raise comes as the financial regulator ASIC is also investigating ANZ’s alleged involvement in market manipulation and alleging it made false statements to the Australian Office of Financial Management, the government’s debt agency.

In addition to the $750 million capital requirement, ANZ will be required to appoint an independent party to review concerns about risk management in its markets business and the broader impact on the business as a whole and to develop a recovery plan to take into account the findings of the independent review.

ANZ and Westpac are the two remaining major banks that still have capital buffers imposed by APRA after each of the four major banks was hit with separate capital increase orders in 2019 after deficiencies in their risk management controls were identified.

CBA’s $1 billion capital buffer (introduced following APRA’s regulatory investigation into the bank, which also triggered an expanded investigation into the other banks) was lifted in 2022; NAB’s was lifted earlier this year.

Westpac’s original capital surcharge of $500 million, increased to $1 billion months later, was cut in half in July this year, with APRA acknowledging the bank’s significant progress on its CORE recovery program.

As a result, ANZ is the only bank whose APRA-mandated capital buffer will be increased this year.

APRA notes that the bank has launched several investigations into these risk control issues, raising concerns that it has not yet “adequately addressed deficiencies in controls, risk culture, governance and accountability”.

While APRA Chairman John Lonsdale acknowledged ANZ’s efforts over the past five years to improve its risk governance and culture, he expressed concern about the recent spate of poor practices, which “suggest that significant gaps remain that need to be addressed as a matter of priority”.

He noted that the regulator had to take action because of “ongoing problems with risk management and culture.”

Lonsdale concluded: “We have made it clear to ANZ’s board and management that we need to urgently review these issues to ensure that the underlying causes are identified and addressed.

“Depending on the outcome of ANZ’s independent review, APRA will consider whether further action is required.”