SYDNEY Oct 18 Australia's banking sector
regulator said on Tuesday it will review pay practices for some
executives, risk and control and risk-taking staff at financial
institutions as part of an increased focus on risk management
The regulator said it wanted to ensure banks avoided the
behaviour that caused the global economic downturn in 2008-09 at
a time when Germany's Deutsche Bank is facing a
crippling $14 billion fine from US regulators over
investigations into its mortgage-backed securities trading.
Australia's four biggest banks, which control 80 percent of
the lending market, are under heavy political and regulatory
scrutiny for practices including the provision of bad financial
advice and alleged interest rate-rigging.
Australian Prudential Regulation Authority (APRA) chairman
Wayne Byres said in a statement that the regulator would apply
"greater supervisory intensity" to institutions that were either
unwilling or unable to address behaviours that were inconsistent
with prudent risk management practices.
APRA said it would engage with industry partipants and
relevant industry experts this year and in 2017 to review pay
practices to gauge how well existing requirements were being
implemented and how they were interacting with the risk cultures
of regulated institutions.
The Australian Bankers' Association (ABA) on Tuesday said in
a statement that it welcomed initiatives that helped banks
understand and manage their own risk culture.
"It is important that the tone is set from the top and
employees have a clear framework to make decisions that
appropriately balance the potential gain with any potential
loss," ABA Chief Executive Steven Münchenberg said.
In testimony before an Australian parliamentary committee on
Oct. 5, Australia and New Zealand Banking Group Chief
Executive Shayne Elliott denied the bank had a "blokey", or
male-dominated, culture of risk-taking in its institutional
Two employees sacked for alleged involvement with
interest-rate rigging last year claimed in an unfair dismissal
case that a culture of sex, drugs and alcohol was rampant in the
"We have done a lot more ethics training in that
business," Elliott said on Oct. 5.
(Reporting by Jamie Freed; Editing by Simon Cameron-Moore)