APRA furiously waves lettuce leaves at banks

Via banking legend Ian Rogers today:

Self-disclosures around the Australian banking industry’s post-CBA “self-assessment” challenge range in quality between dismal and dire.

Or, in APRA’s own words: “Poor” and “moderate” are the best that can be said for the “quality” of these assessments” by nine Australian banks in a humiliating information paper from APRA yesterday on “Self-assessments of governance, accountability and culture”.

APRA explained that it “set three principles that it expected the self-assessments to reflect: Depth, Challenge and Insights, with the latter defined as “to inform the board of areas requiring attention and improvement, and how better practice can be achieved.”?

APRA summed up the quality of the latter as: “Limited insight … while most institutions met APRA’s expectations for depth and challenge, only a few self-assessments identified new insights”.

The report vented APRA disquiet over the “extent of issues raised … accompanied with lengthy lists of planned actions”.

These, APRA said, “suggest that many institutions have yet to develop a clear understanding of what factors have caused weaknesses to manifest and persist”.

OK, so nothing has been fixed post-Hayen Royal Commission. Yet APRA is itself cutting lending standards, in the form of the shredded interest rates buffer, just five months after it said is was permanent, sending a clear signal that it is leading risk on. I mean, seriously, these parasites deserve one another.

Banking Day says it all:

The Australian Prudential Regulation Authority will step up supervisory activity and is considering applying additional capital requirements to some institutions, in response to the findings of a self-assessment by large financial institutions that identifies a number of areas for improvement in the management of non-financial risks, accountability and culture.

Step up that activity. Get more engaged and captured. Cut the buffer again. Rinse and repeat.

It’s a pantomime.

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