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APRA to apply additional operational risk capital requirement

APRA has advised ANZ that it will require an additional capital overlay of $500 million[1] for operational risk following APRA’s recent report on Australian banks’ self-assessments into governance, culture and accountability. 

This represents an 18 basis point impact on ANZ’s Common Equity Tier 1 (CET1) capital ratio 2]The increased capital requirement is effective from 30 September 2019.


APRA notes that the overlay will apply until ANZ has effectively completed the planned uplift in non-financial risk management as outlined in ANZ’s Self-Assessment Roadmap.


Separately, as previously announced by APRA, the revisions to the measurement of counterparty credit risk (SA-CCR) commenced on 1 July 2019.  ANZ estimates that these changes will result in an increase in risk weighted assets, equivalent to approximately 15 basis points of CET1 capital.


[1] The impact on risk weighted assets is $500 million multiplied by 12.5 as per APRA’s prudential standards.  Consequently, the actual impact on capital will vary depending on ANZ’s capital ratio at the time.

[2] Based on ANZ’s capital position as at 31 March 2019.


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