The Market Online - At The Bell

Join our daily newsletter At The Bell to receive exclusive market insights

  • 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.

MBL by the numbers
More From The Market Online
The Market Online Video

Market Close: Green lights up on ASX for Easter hunt go

The ASX200 closed the day in record territory - nearly a per cent up with every…
The Market Online Video

Market Update: ASX glows red hot with another hit record

The ASX200 is trading up, hitting a new high of 7901 point and eclipsing the last…
The Market Online Video

Market Close: ASX eases up as staple sector shines

The ASX200 closed up just over half a per cent led by staples, healthcare and industrials.
The Market Online Video

Market update: CPI comes in lower than expected at 3.4%

CPI data released by the Australian Bureau of Statistics turned out better than expected figures of…