APRA Imposes Governance Overlay on Macquarie

The Australian Prudential Regulation Authority (APRA) has imposed a governance overlay of A$100 million on Macquarie Group Limited (MGL) after identifying a breach dating back to 2019 in which the group had miscalculated and understated the capital required to support risks in its non-bank businesses.

APRA noted that the error did not undermine the group’s overall financial stability at any point. However, Deputy Chair Therese McCarthy Hockey said that the breach reflected a serious failure in Macquarie Group’s governance and assurance processes. She emphasized that as one of Australia's largest financial groups, Macquarie is expected to maintain among the highest standards of risk management.

“While APRA acknowledges Macquarie's cooperation, addressing the breach after identification does not diminish the seriousness of the underlying failure,” McCarthy Hockey said. “Board and senior executives are responsible for ensuring their institutions maintain effective risk management, assurance and governance practices that support compliance, not simply react when deficiencies are identified.” 

MGL has since corrected the capital understatement. However, the governance overlay ties up capital and will remain in place until APRA approves its removal, alongside an existing A$500 million capital overlay applied to Macquarie Bank Limited in 2021 following multiple prudential breaches.

Looking ahead, APRA will oversee a comprehensive assessment of the internal framework the group uses to determine required capital for its non-bank arm, and consider further action depending on the findings. The regulator said it will review existing authorizations for bank holding companies across the industry to ensure they adequately address risks arising from group structures and activities. This aligns with a broader review of banking governance structures previously flagged in APRA’s 2026–27 corporate plan.