The Australian Prudential Regulation Authority accepted a Court Enforceable Undertaking from Australia and New Zealand Banking Group on 3 April 2025, simultaneously increasing the bank's capital add-on from $750 million to $1 billion. The action follows long-standing APRA concerns about weaknesses in ANZ's non-financial risk management practices and risk culture, including its operational risk and compliance management, which the regulator said remained present across the bank. APRA first applied a $500 million operational risk capital add-on to ANZ in 2019.
A Court Enforceable Undertaking is a formal enforcement tool that APRA can ask a court to enforce. The undertaking, accepted by APRA, is enforceable in the Federal Court if ANZ fails to meet the obligations specified.
INDEPENDENT REVIEW MANDATED ACROSS THE GROUP
Under the terms of the undertaking, ANZ must appoint an independent reviewer to conduct a group-wide examination of the root causes of its risk management failures. ANZ must also develop a comprehensive remediation plan to address the root causes and appoint a second independent reviewer to provide assurance over its execution.
APRA Chair John Lonsdale said ANZ had offered the undertaking in response to concerns he raised directly with its board, and that the board had assured him it was fully committed to the undertakings. APRA acknowledged progress in ANZ's existing remediation programme but said that programme alone would not address the broader weaknesses.
APRA said its concerns centred on non-financial risks — a category that encompasses operational failures, conduct issues, and compliance breakdowns rather than credit or market risk.
CAPITAL ADD-ON
Capital add-ons are a standard prudential tool that regulators use to require institutions to hold additional buffer above minimum requirements when specific risk concerns are present.
The A$1 billion add-on will remain until ANZ satisfies APRA that the remediation required under the undertaking has been completed.
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