Australian regulator removes Westpac add-on liquidity requirement

The removal of the add-on takes effect this 1 September.

The Australian Prudential Regulation Authority has removed a liquidity add-on imposed on Westpac Banking Corporation.

In 2020, the Australian regulator ordered Westpac to add 10% to the amount of cash it keeps on hand in response to material breaches that demonstrated weaknesses in the bank’s risk management and oversight, risk control framework and risk culture in its liquidity risk management and reporting.

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APRA has removed the add-on after Westpac completed a program to meet APRA’s liquidity standard. The removal of the liquidity add-on is effective starting 1 September.

“The capital requirement add-on of AU$1b to reflect Westpac’s heightened operational risk profile remains in place,” APRA said.

According to Westpac, the removal of the add-on contributes around 13 percentage points to the bank’s liquidity coverage ratio.