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Australia's bank watchdog orders Macquarie, HSBC, Rabobank to tighten funding

Stock MarketsJul 24, 2019 02:14AM ET
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© Reuters. Australia's bank watchdog orders Macquarie, HSBC, Rabobank to tighten funding

SYDNEY (Reuters) - Australia's banking regulator said on Wednesday it has forced Macquarie Group Ltd (AX:MQG) and the domestic units of Rabobank and HSBC (L:HSBA) to tighten funding arrangements in Australia, saying they had been in breach of reporting requirements.

The Australian Prudential (LON:PRU) Regulation Authority (APRA) said it had reviewed the three lenders and found they were "improperly reporting the stability of the funding they received from other entities within the group", in a statement.

"APRA is requiring these banks to strengthen intra-group agreements to ensure term funding cannot be withdrawn in a financial stress scenario," APRA said, because such arrangements could undermine the strength of the Australian entities.

The three banks had no immediate response when contacted by Reuters. APRA gave no further details of the required strengthening, but did add the lenders would be required to re-state past funding and liquidity ratios.

APRA said there was no immediate threat to the stability of the three lenders it targeted in Australia.

"Macquarie Bank, Rabobank Australia and HSBC Australia are financially sound, with strong liquidity and funding positions in the current stable environment," APRA Deputy Chair John Lonsdale said in a statement.

"However, to ensure they would be able to withstand a scenario of financial stress, group funding agreements for Australian banks must be watertight."

Australia's banks are facing tougher scrutiny in the wake of a sweeping public inquiry into the financial sector that revealed widespread wrongdoing and lax regulatory oversight.

New Zealand's central bank, APRA's regulatory counterpart there, has flagged lifting bank capital requirements and has also censured its largest lender, Australia and New Zealand Banking Group Ltd (AX:ANZ), over risk-capital failures.

Australia's bank watchdog orders Macquarie, HSBC, Rabobank to tighten funding
 

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