Market Herald logo

Subscribe

Be the first with the news that moves the market
  • Macquarie Group’s (MQG) banking arm will need to maintain additional capital requirements to the tune of $500 million after a series of breaches raise “serious questions” about the bank’s risk management practices
  • The penalties relate to poor risk management and multiple breaches of the Australian Prudential Regulation Authority’s (APRA) reporting standards between 2018 and 2020
  • Macquarie Bank will now be required to hold some half a billion dollars as an additional capital safeguard and faces a 15 per cent increase on its liquidity coverage ratio
  • In a statement from Macquarie Group, the company acknowledged and shared APRA’s “disappointment” and says it is working to strengthen its risk governance
  • Macquarie Group shares are off 1.01 per cent following the news, trading at $151.28

Macquarie Group’s (MQG) banking arm will need to maintain additional capital requirements to the tune of $500 million as a series of breaches raise “serious questions” about the bank’s risk management practices.

The penalties are in response to Macquarie’s “incorrect treatment of specific intra-group funding arrangements for the purposes of calculating capital and related entity exposure metrics” and multiple breaches of the financial watchdog’s reporting standards between 2018 and 2020.

As a result, the Australian Prudential Regulation Authority (APRA) has upped the bank’s liquidity and operational risk capital requirements, forcing Macquarie to hold an additional $500 million in capital as a safeguard.

The Australian multinational will also be required to add 15 per cent to the net cash outflow component of its liquidity coverage ratio — a financial cushion designed to cover a financial institution’s outgoings in times of emergency or liquidity disruptions.

Macquarie and the financial watchdog have reiterated the penalties do not reflect or impact the bank’s current capital or liquidity positions. However, APRA also noted the events “raise serious questions about the bank’s risk management practices and ability to calculate and report key prudential ratios”.

Macquarie Group’s Managing Director and Chief Executive Officer Shemara Wikramanayake said the company shares APRA’s disappointment.

“We recognise that while specific historical matters leading to these actions have been addressed, we have continued work to strengthen our operating platform and risk governance,” he commented.

Macquarie Bank’s new capital and liquidity requirements will take effect from today.

Macquarie Group shares are off 1.01 per cent following the news, trading at $151.28 at 2:28 pm AEDT.

More From The Market Herald
Aurizon (ASX:AZJ) - Managing Director and CEO, Andrew Harding

" Aurizon (ASX:AZJ) slashes half-yearly dividend ahead of One Rail buyout, net profit down 4pc

Rail freight operator Aurizon (ASX:AZJ) has slashed its first-half dividend by nearly a third amid slightly…

" Aurizon Holdings (ASX:AZJ) reveals $1.3B refinancing deal

Aurizon Holdings (ASX:AZJ) has agreed to a restructured debt deal, giving the company access to some…

" Aurizon (ASX:AZJ) profits from failed ACCC appeal

Rail freight operator Aurizon (ASX:AZJ) can progress with the sale of its Acacia Ridge Terminal after…

" Aurizon (ASX:AZJ) to buy One Rail for $2.35b

Rail transport company Aurizon (ASX:AZJ) agrees to purchase One Rail Australia for $2.35 billion.