The Australian Prudential Regulation Authority (APRA) outlined plans for a system-risk stress test covering financial-sector linkages and common technology dependencies. It also tightened oversight of Bendigo Bank and retained its AUD50 million ($35 million) capital add-on, while Judo reported elevated credit impairments.

Santander completed its Webster acquisition, with an estimated 140-basis-point CET1 impact. Elsewhere, AmBank added a geopolitical provision, Absa and Heartland reported lower problem-loan ratios and ING and EFG pursued capital optimisation.

Read more on the week’s key developments:

1. APRA expands system-risk stress testing as it targets common technology dependencies

APRA’s 2026–27 Corporate Plan, published on 20 August, sets out plans for a new system-risk stress test. The regulator will examine linkages between financial sectors while increasing supervisory attention on concentrated reliance on common technology platforms and material service providers. APRA will also conduct thematic reviews of bank lending practices, finalise targeted changes to bank capital rules and begin consultation on revisions to liquidity standards.

APRA will collect data on common technology and service-provider dependencies and incorporate cross-sector linkages into stress testing. Its Prudential Standard CPS 230 already requires regulated entities to strengthen oversight of material service providers. No new stress-test results or revised liquidity requirements have yet been produced.

2. Santander completes Webster acquisition with estimated 140-basis-point CET1 impact

Santander announced on 20 August that it had completed the acquisition of Webster Financial following shareholder and regulatory approvals. The combined US operations have a pro forma balance sheet of approximately $327 billion in assets, $185 billion in loans and $172 billion in deposits, based on year-end 2025 balances. When the transaction was announced in February, the bank estimated that Webster would consume around 140 basis points of group CET1 capital, with CET1 expected at 12.8%–13.0% at end-2026.

The 140-basis-point impact is not a new estimate this week. Santander reported a CET1 ratio of 14.0% at the end of the second quarter after the completed TSB acquisition reduced the ratio by 55 basis points. Excluding that effect, the group generated 20 basis points of capital organically during the quarter. Santander continues to expect CET1 of 12.8%–13.0% at year-end. An actual post-closing CET1 ratio incorporating Webster has not yet been disclosed, so the 140-basis-point figure remains an estimate instead of a realised capital outcome.

3. APRA retains Bendigo capital add-on after risk remediation fails

Australia’s prudential watchdog imposed additional licence conditions on Bendigo and Adelaide Bank on 18 August after an independent review found longstanding and pervasive weaknesses in its non-financial risk management. The bank lacked a clear, complete and reliable view of its regulatory obligations, material risks and key controls, while deficiencies persisted in governance, accountability, compliance and risk oversight despite several years of remediation under the BEN+ programme. Bendigo must undertake a comprehensive rectification programme, appoint an independent assurer and provide board attestations. APRA will retain the existing AUD50 million ($35 million) operational-risk capital add-on until its prudential concerns are addressed.

The capital add-on predates this week, but APRA has retained it while escalating its intervention to formal licence conditions. The bank’s board must attest to the remediation and an independent party will assess its delivery. APRA described Bendigo as financially sound with strong capital and liquidity despite the governance and control weaknesses.

4. Judo confirms elevated credit impairments while CET1 remains above target range

Judo Bank released its FY2026 results through the Australian Securities Exchange on 18 August. The bank reported profit before tax of AUD168.1 million ($119 million), while impairment expense increased to AUD117.7 million ($83 million). Gross loans and advances rose 18% to AUD14.7 billion ($10.4 billion), while the CET1 ratio ended the year at 12.4%, above management’s 11%–12% operating range. Loans 90 days past due and impaired assets increased to 2.90% of gross lending.

The results were within guidance Judo issued in June after three borrower-specific exposures across different sectors had increased specific provisions. The bank forecast FY2026 credit costs of AUD116 million–AUD122 million ($80 million–$84 million), 90-days-past-due and impaired loans of approximately 3% and CET1 of around 12.4%.

5. AmBank adds geopolitical overlay as impaired-loan ratio edges higher

AmBank Group reported on 18 August that first-quarter net impairment charges were MYR69.8 million ($17 million), including an additional MYR52.5 million ($13 million) provision overlay for exposures considered potentially vulnerable to sustained geopolitical tensions. Its gross impaired-loan ratio increased slightly to 1.62% from 1.59%, while loan-loss coverage including regulatory reserves strengthened to 102.5% from 100.9%. Group CET1 remained at 14.82%, while the liquidity coverage ratio for consolidated banking entities stood at 143.9%.

Overall net impairment charges were marginally lower year-on-year as retail overlay reversals partly offset the geopolitical provision, higher wholesale provisions and lower recoveries. The geopolitical overlay was forward-looking and did not represent specific realised losses. AmBank did not disclose the size or sector composition of the exposures covered.

6. Absa raises CET1 as Stage 3 loan ratio improves

Absa Group’s interim results released on 18 August showed a CET1 ratio of 12.8%, up from 12.5% a year earlier. Its Stage 3 loan ratio declined to 5.30% from 5.90%, while the liquidity coverage ratio moved to 125.2% from 129.0%. Gross loans and advances increased 5% to ZAR1.543 trillion ($95.6 billion) and deposits and debt funding increased 8% to ZAR1.909 trillion ($118.3 billion).

The 12.8% CET1 ratio sits above Absa’s stated 11.0%–12.5% target range, while the group increased its interim dividend by 8.3%. The Stage 3 ratio declined to 5.30%, while gross lending expanded 5%. The liquidity coverage ratio remained above the 100% regulatory minimum. Absa did not disclose how much of the Stage 3 movement came from cures, repayments, write-offs or changes in portfolio mix.

7. Heartland lowers NPL ratio as asset clean-up releases capital

Heartland Group released its FY2026 results on 20 August after concluding its non-strategic asset realisation programme. Heartland Bank’s non-performing loan ratio fell 129 basis points to 1.92%. During FY2026, the value of non-strategic assets declined by NZD270.7 million ($162 million), creating NZD31.7 million ($19 million) of available capital. Across the programme from December 2024 to June 2026, Heartland reduced non-strategic assets with a 94% recovery rate. Excluding non-strategic assets and unsecured lending, Heartland Bank’s NPL ratio stood at 1.38%.

Heartland did not provide a comparable prior-year NPL ratio excluding non-strategic assets and unsecured lending. The reported 129-basis-point decline covers both exited and retained portfolios.

8. ING places TMBThanachart shares in further portfolio reduction

ING announced on 18 August that it expected to reduce its stake in TMBThanachart Bank from 19.5% to 11.6% through a private placement to institutional investors. Gross proceeds were approximately EUR475 million ($550 million), and ING said the transaction would have a small positive impact on profit and loss and its CET1 ratio. Settlement was scheduled for 21 August. ING described the transaction as part of its active capital management and approach to optimising its investment portfolio.

The transaction follows a June sale that reduced ING’s stake from 23.1% to 19.5% for approximately EUR243 million ($281 million) and had no material effect on its capital ratio. Upon settlement, the August placement would reduce ING’s ownership by another 7.9 percentage points. The group described the CET1 benefit as “small”.

9. Apollo discloses cloud-platform data breach

Apollo Management Holdings disclosed in a notice filed with the California Attorney General that a social-engineering incident resulted in unauthorised access to information on certain cloud platforms between 6 and 10 July. The information potentially involved included names, dates of birth, contact details, home addresses and Social Security numbers. Apollo said it notified law enforcement, engaged external cybersecurity and forensic specialists and strengthened its security protocols.

Apollo said its investigation remained ongoing and that it had found no evidence at the time of the notice that the information had been publicly posted or used for identity theft or fraud. It offered affected individuals 24 months of identity-protection and credit-monitoring services.

10. EFG expects 30-basis-point CET1 uplift from Harris Allday sale

EFG International announced on 19 August that it had signed an agreement for Canaccord Wealth to acquire the front-office teams and client assets of its Harris Allday business in the UK. Harris Allday manages approximately GBP3.1 billion ($4.2 billion) in assets and generated GBP20.3 million ($28 million) in revenue in 2025. EFG expects the transaction to contribute approximately CHF20 million ($25 million) to second-half pre-tax profit and increase its group CET1 ratio by around 30 basis points. Completion is expected in the fourth quarter.

EFG’s CET1 ratio stood at 15.0% at the end of June, up 100 basis points from end-2025, while its liquidity coverage ratio was 267%. The transaction has not completed and EFG did not disclose the purchase price, preventing comparison of the consideration, earnings foregone and capital released.

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