Westpac, ANZ and NAB all undertook self-assessments after the damning CBA prudential inquiry exposed a number of weaknesses in banking culture.
Westpac recently released its self-assessment, while NAB released its report in 2018, which identified significant shortcomings in its management.
This leaves just ANZ who has yet to publicly release its self-assessment and, as its spokesperson told Investor Daily, “ANZ has no issue with the self-assessment becoming public, but it is up to APRA to release it.”
The spokesperson said ANZ had worked with APRA to complete the confidential submission and essentially handed over custody of the report to them.
The self-assessments kicked off last year when APRA chair Wayne Byres wrote to the country’s banks, insurers and super licensees following the CBA prudential inquiry asking them to gauge whether weaknesses uncovered at CBA existed in their companies.
The result of these self-assessments led APRA last week to increase the minimum capital requirements by $500 million and prompted Westpac to release publicly its self-assessment.
In its self-assessment, Westpac found a range of shortcomings but said these did not call into question the bank’s ability to manage non-financial risk.
“A wide range of shortcomings and opportunities to enhance frameworks and practices are identified in this report, but these do not aggregate to a level of significance that would call into question Westpac’s fundamental ability to manage non-financial risk,” said the assessment.
It admitted its non-financial risk management was less mature than its management of financial risks and many of the report’s recommendations were directed at lifting this maturity.
Westpac also said the issues identified in the prudential inquiry into CBA were not identified by Westpac in its own report, but this was not intended to excuse its conduct.
“The prominent behavioural characteristics at CBA identified by the prudential inquiry, particularly a sense of chronic ease, complacency and certain governance-related issues, are not similarly prominent at Westpac.”
The report found that there was scope to improve inefficiencies and that the group too often spent time analysing, resulting in sub-par execution.
Overall though, the board of Westpac came out well, with executives having confidence with the directors and employees commented positively about the executive team.
Like the other banks, though, there was not a culture of speaking up, and managers were found to be defensive if employees did speak up.
“Further drivers include hierarchical behaviour not conducive to upward challenge, fear of consequences if people do challenge their superior, and a lack of confidence that sufficient action will result from raising of issues,” the report read.
NAB’s assessment was a bit more damning than the Westpac one, which found significant shortcomings in conduct.
“Weaknesses were found in areas such as conduct, compliance and the integrated management of operational risk,” it read.
The self-assessment was released before the royal commission report where NAB was singled out among the banks.
“I was not persuaded that NAB is willing to accept the necessary responsibility for deciding, for itself, what is the right thing to do, and then having its staff act accordingly,” said commissioner Kenneth Hayne in the report.
NAB said that it may take up to a decade for the culture to be reformed. But in its response to APRA’s minimum capital increase, NAB said that work had already begun.
