The Australian Prudential Regulation Authority (APRA) has agreed to a court enforceable undertaking (CEU) from Bank of Queensland Limited (BOQ) acknowledging its past risk management and risk culture weaknesses and committing to rectify these serious issues.
The CEU follows several breaches of APRA's prudential standards in 2022 and 20231, and APRA's prudential review into BOQ's operational risk, compliance and risk culture. The CEU also incorporates the findings of an independent report on the root causes of these issues, which was completed at APRA's request in April 2023.
BOQ has acknowledged the weaknesses set out in the CEU and has agreed to:
- prepare a remediation plan that details all activities BOQ is undertaking, or will undertake, to address the weaknesses, with a clear timeline for implementation, and that specifies the Accountable and Responsible Persons for each activity;
- submit the remediation plan to APRA for approval and address concerns APRA may have; and
- appoint an independent reviewer to provide written reports on the implementation of the remediation plan, whether it is sustainable and whether further work is necessary to ensure the root causes of the material weaknesses are addressed.
In addition, APRA will require BOQ to hold an operational risk capital add-on of $50 million to take effect from 30 May 2023. The capital add-on will remain in place until such time as BOQ has delivered the remedial action plan under the CEU to APRA's satisfaction.
