The prudential regulator has intervened after ING Bank Australia overstated a key financial resilience measure.
The Australian Prudential Regulation Authority (APRA) has imposed licence conditions, tougher liquidity settings, and a $50 million operational-risk capital add-on on ING Bank Australia after the lender identified multi-year errors in calculating its Liquidity Coverage Ratio (LCR).
ING Australia, one of the country’s largest banks, informed APRA in July that it had “materially miscalculated” its liquidity position over several years.
APRA noted that the errors caused the bank to significantly overstate its LCR – a key measure of whether banks hold sufficient liquid assets to withstand stressed cash outflows.
While ING had reported an LCR of around 160 per cent, APRA found that its actual ratio was substantially lower and, at times, below the 100 per cent minimum required under Prudential Standard APS 210 Liquidity.
The regulator added that ING had since lifted its liquidity position to well above the regulatory threshold.
Governance under scrutiny
APRA said that its intervention reflected concerns extending beyond the calculation itself, with the regulator requiring independent examinations of the failures and ING’s broader risk management and governance arrangements.
The bank must develop a remediation plan for weaknesses identified through the reviews and obtain independent assurance that the resulting changes have been implemented effectively.
APRA deputy chair Therese McCarthy Hockey said ING’s scale made robust control frameworks essential.
“ING Australia is one of Australia’s largest banks with more than 2 million customers nationwide and assets of over $100 billion. As such, APRA expects it to have robust governance and internal controls to support its financial and operational resilience,” McCarthy Hockey said.
Not just a reporting error, says APRA
The LCR is a central post-global-financial-crisis safeguard, designed to ensure banks can cover a period of severe liquidity stress using high-quality liquid assets.
The regulator outlined that a failure to accurately calculate it could therefore obscure whether a lender was meeting one of its most important prudential buffers.
“Although the bank remains well capitalised, and benefits from the financial strength of the broader ING group, these breaches are not simply a reporting error,” McCarthy Hockey said.
She added that an inaccurate reading of liquidity resilience raised wider questions about how a bank identified, managed, and escalated risk.
“When a bank cannot accurately measure one of its most important financial safeguards, it raises fundamental questions about the effectiveness of its risk management and controls. APRA is therefore acting decisively to ensure ING rectifies these weaknesses expediently,” McCarthy Hockey said.
ING has accepted APRA’s measures and said that it had self-reported the deficiencies.
[Related: APRA seeks $8m Bendigo cyber-control penalty]
Want to see more stories from trusted news sources?
Make The Adviser a preferred news source on Google.
Click here to add The Adviser as a preferred news source.
