Australia’s prudential regulator has ordered Macquarie Group to hold an extra A$100m of capital after finding that the group had understated the capital needed for its non-bank businesses since 2019. The Australian Prudential Regulation Authority (APRA) said Macquarie Group Limited had miscalculated the capital required to support risks in the non-bank arm, a breach of its non-operating holding company (NOHC) authority, which APRA identified during a recent capital review.
APRA said Macquarie had since addressed the understatement and that the overall financial stability of the group, including the bank, was not undermined at any point. It will now oversee a full assessment of the Economic Capital Model Macquarie uses to set non-bank capital and, subject to the findings, may consider further action.
WHAT APRA FOUND
APRA deputy chair Therese McCarthy Hockey said the breach reflected a serious failure in Macquarie Group’s governance and assurance processes. “Macquarie failed to identify and address this issue through its own governance and assurance processes, which falls short of APRA’s expectations,” she said. APRA acknowledged Macquarie’s cooperation but said addressing the breach after identification does not diminish the seriousness of the underlying failure.
A capital overlay is an add-on to required capital rather than a fine, but it ties up capital the group cannot otherwise deploy. The action concerns capital for the non-bank businesses, not Macquarie Bank’s own capital ratios, and APRA has not suggested the breach affected the bank’s lending, according to MPA.
ON TOP OF A 2021 OVERLAY
The new overlay sits on top of a A$500m capital overlay that APRA applied to Macquarie Bank in 2021, and removing either requires APRA’s approval. That earlier action related to the incorrect treatment of intra-group funding arrangements in calculating capital and related-entity exposure metrics, and to breaches of liquidity reporting standards between 2018 and 2020; APRA also placed the bank under intensified supervision.
APRA said that, as previously flagged, it will review all existing NOHC authorisations to ensure they appropriately address the risks arising from group structure and activities. MPA reported that APRA’s 2026–27 corporate plan flagged a review of banking governance structures.
A CONTESTED STRUCTURE
The structure has been challenged by a rival. Commonwealth Bank commissioned analysis from consultancy Mandala arguing that Macquarie’s NOHC structure lets its banking arm operate on a lighter capital base than the major banks, helping it price mortgages and deposits more aggressively. Macquarie rejects that claim, and a spokesperson told MPA that the breach did not result in any competitive advantage for the bank.
Macquarie Bank is Australia’s fifth-largest home lender, with over A$200bn of home loans, and does not disclose its net interest margins, MPA reported.
THE TGB VIEW
Macquarie Group ranks 43rd in Asia-Pacific in the TGB Bank Rankings, with US$24.7bn of shareholders’ equity on March 2026 figures, and its Bank Group common equity tier 1 ratio was 12.9% at 30 September, so the A$100m overlay is modest in size. What sets this case apart is where the error sat: Basel III ratios cover only the Bank Group, and the miscalculation was in capital for the non-bank businesses, which APRA now wants assessed. The review of every NOHC authorisation will also test the argument in the Mandala analysis, commissioned by Commonwealth Bank, that the structure lets Macquarie’s banking arm run on a lighter capital base.
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