The Australian Prudential Regulation Authority accepted a Court Enforceable Undertaking from Australia and New Zealand Banking Group on 2 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 management of operational risk and compliance that the regulator said dated back to 2019 and had not been sufficiently remedied in the intervening years.
A Court Enforceable Undertaking is among the most serious supervisory tools available to APRA short of licence revocation. Once accepted by the Federal Court, it carries the force of a legal commitment and exposes ANZ to contempt proceedings if it fails to meet the obligations specified. The instrument signals that APRA concluded its existing supervisory measures — including the previous $750 million capital add-on — had not produced the pace of remediation it required.
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. The scope of that review covers the full breadth of ANZ's non-financial risk framework, including how the bank identifies, escalates, and remediates operational and compliance deficiencies. APRA will receive the reviewer's findings and retain the ability to direct further action based on the outcomes.
The requirement for an independent, externally conducted review reflects APRA's assessment that internal remediation efforts have been insufficient. ANZ has acknowledged the weaknesses in public statements and said it is committed to working constructively with the regulator. The bank noted that it had already taken steps to strengthen its risk governance, including changes to senior leadership and investment in risk management technology, but accepted that further work remains.
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. Non-financial risk has become a priority for regulators globally following a series of high-profile failures at large financial institutions, and APRA has made clear that it expects boards and senior executives to treat the management of such risks with the same rigour applied to balance-sheet risks.
CAPITAL ADD-ON RAISED TO REFLECT PERSISTENT WEAKNESSES
The increase in the capital add-on from $750 million to $1 billion is a direct response to APRA's view that ANZ's remediation has not advanced quickly enough. 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 higher amount reflects the ongoing nature of the weaknesses rather than a new or discrete failure.
For ANZ, the additional $250 million in required capital has a tangible cost: capital held as a regulatory buffer earns a lower return than the same funds deployed in revenue-generating activities. The bank will need to factor the elevated add-on into its capital planning and may face questions from investors about how long it expects the requirement to remain in place, a question that depends on the pace of demonstrated improvement.
APRA indicated it would monitor ANZ's progress under the undertaking and could vary its terms if circumstances change. The regulator has made a series of public supervisory actions against major banks in recent years, reflecting its stated intention to use its enforcement toolkit more actively when institutions fall short of its expectations. ANZ has until the independent review is completed to demonstrate the structural improvements the undertaking requires.