APRA Slaps $50 Million Capital Charge on Bendigo Bank, CET1 Ratio Dips
Bendigo and Adelaide Bank has been hit with a $50 million operational risk capital charge by APRA, while AUSTRAC launches an enforcement investigation into serious AML/CTF breaches. The bank commits to intensifying risk management efforts amid regulatory scrutiny.
- APRA imposes $50 million operational risk capital charge effective January 2026
- CET1 ratio expected to drop by approximately 17 basis points
- AUSTRAC initiates enforcement investigation over AML/CTF deficiencies
- Bank acknowledges need to strengthen non-financial risk management
- Cost estimates for risk improvements to be disclosed later
APRA Capital Charge and Impact on Capital Ratios
Bendigo and Adelaide Bank Limited (ASX – BEN) has disclosed a significant regulatory development with the Australian Prudential Regulation Authority (APRA) imposing a $50 million operational risk capital charge. This charge, effective from 1 January 2026, is set to reduce the bank’s Level 2 Common Equity Tier 1 (CET1) ratio by approximately 17 basis points. Despite this hit, the bank’s CET1 ratio stood at a robust 11.19% as of 30 November 2025, comfortably above both the Board’s target and APRA’s benchmark for being ‘unquestionably strong’.
AUSTRAC Enforcement Investigation Unfolds
Compounding the capital charge, the Australian Transaction Reports and Analysis Centre (AUSTRAC) has escalated its scrutiny by commencing an Enforcement investigation into Bendigo Bank’s anti-money laundering and counter-terrorism financing (AML/CTF) controls. This follows the bank’s earlier admission of deficiencies in these areas. AUSTRAC has identified serious potential contraventions of the AML/CTF Act 2006, though it has yet to decide on the specific regulatory response or enforcement actions. The bank has pledged to maintain constructive engagement with AUSTRAC as the investigation progresses.
Bank’s Response and Risk Management Overhaul
In response to these regulatory pressures, Bendigo Bank’s leadership has acknowledged the critical importance of robust risk management. Chair Vicki Carter emphasised the bank’s commitment to protecting customers and supporting community prosperity through improved risk practices. CEO Richard Fennell highlighted ongoing efforts over the past year to enhance risk culture and capability, while admitting the need to intensify focus and resources on non-financial risk areas. The Board and Executive team are fully committed to elevating the bank’s risk maturity, with cost estimates for these initiatives to be disclosed once determined.
Looking Ahead
This dual regulatory challenge presents a complex backdrop for Bendigo Bank as it navigates capital adequacy pressures alongside a serious compliance investigation. While the bank’s capital position remains solid for now, the unfolding AUSTRAC enforcement process and the financial implications of risk remediation efforts will be closely watched by investors and market participants. The situation underscores the increasing regulatory focus on operational and non-financial risks within the banking sector.
Bottom Line?
Bendigo Bank’s regulatory hurdles mark a pivotal moment, with risk management overhaul and enforcement outcomes set to shape its near-term trajectory.
Questions in the middle?
- What specific enforcement actions might AUSTRAC take against Bendigo Bank?
- How much will the bank’s risk remediation efforts ultimately cost and impact profitability?
- Will the capital charge and AML investigation affect Bendigo Bank’s competitive position?
