The Australian Prudential Regulation Authority (APRA) will reduce the $1 billion capital add-on applied to Westpac Banking Corporation (Westpac) by $500 million in response to the bank's progress in improving its risk governance, culture and risk management. 

APRA imposed a $500 million capital add-on on Westpac in July 2019 to reflect the higher operational risk identified in the bank’s Risk Governance Self-Assessment. An additional $500 million capital add-on was imposed in December 2019 to reflect the heightened operational risk profile of the bank, primarily due to risk governance concerns.

Westpac then entered a Court Enforceable Undertaking (CEU) with APRA in December 2020 where it committed to remediating weaknesses in its culture, governance and accountability, and address the root causes of these issues. In response, Westpac established the Customer Outcomes and Risk Excellence (CORE) Program and appointed an independent reviewer.

In recognition of the progress and improvements delivered by Westpac under CORE, APRA has halved the add-on to its operational risk capital requirement, effective immediately. The remaining $500 million capital add-on will remain in place until Westpac completes its transition work and APRA undertakes further validation work to assess the sustainability of improvements made in risk governance, culture and accountability practices and outcomes.