Global: Australia raises ING’s capital and liquidity requirements over reporting failures

Australia’s prudential regulator has imposed additional capital and liquidity requirements on ING Bank Australia after identifying miscalculations that overstated the bank’s liquidity position and resulted in breaches of minimum regulatory requirements.

The Australian Prudential Regulation Authority (APRA) said on Thursday that it had imposed new licence conditions on the local unit of Dutch banking group ING, requiring the bank to strengthen its liquidity position and hold additional capital against operational risks.

The measures follow the discovery of reporting errors that affected the bank’s calculation of its Liquidity Coverage Ratio (LCR) over several years.

APRA increases liquidity requirements

Under the new measures, APRA has increased the minimum liquidity requirements applicable to ING Bank Australia.

The regulator also imposed a A$50 million ($35.84 million) operational risk capital add-on, reflecting concerns about the bank’s operational risk profile and weaknesses in its prudential reporting processes.

APRA said ING Australia notified the regulator in July after identifying miscalculations in its liquidity position that had resulted in overstated LCR figures.

The LCR is a key prudential measure designed to ensure banks maintain sufficient high-quality liquid assets to withstand short-term liquidity stress.

According to APRA, ING Australia had reported an LCR of approximately 160%. However, a review of the underlying calculations showed that the bank’s actual liquidity ratio was substantially lower and had fallen below the mandated 100% minimum at certain points.

Reporting failures trigger regulatory intervention

The discrepancy has raised concerns over the effectiveness of ING Australia’s internal controls and prudential reporting systems.

APRA’s response signals the importance regulators place on accurate regulatory data, particularly where reported figures are used to assess a financial institution’s ability to withstand liquidity pressures.

In addition to the higher liquidity and capital requirements, ING Australia will be required to commission an independent review into the circumstances surrounding the reporting failures.

The review will examine the causes of the miscalculations as well as the bank’s broader risk management and governance practices.

The additional scrutiny is expected to help identify weaknesses in the processes used to calculate, validate and report prudential information to the regulator.

ING commits to stronger governance and compliance

ING Australia CEO Melanie Evans acknowledged the deficiencies and said the bank was committed to addressing the issues identified by APRA.

“We regret that these deficiencies existed in our operations and we are committed to meeting APRA’s expectations when it comes to standards of risk management, governance and regulatory reporting,” Evans said.

The bank’s response comes as financial regulators globally continue to place greater emphasis on operational resilience, accurate regulatory reporting and effective governance as key components of financial stability.

For ING Australia, the additional capital and liquidity requirements will increase the cost of maintaining its local operations while the independent review provides an opportunity to strengthen controls around prudential reporting.

Prudential reporting remains critical to financial stability

The action against ING Australia highlights the potential consequences of inaccurate regulatory reporting, particularly when errors affect key measures of a bank’s financial resilience.

While the regulator’s intervention is focused on ING’s liquidity and operational risk, the broader implications extend to governance and compliance systems responsible for producing reliable prudential information.

The case reinforces the need for financial institutions to maintain robust controls, independently validate regulatory data and promptly identify and correct reporting weaknesses.

For regulators, accurate prudential reporting remains essential to identifying emerging risks and ensuring banks maintain sufficient buffers to withstand financial stress.