Corporate Debt Restructuring Masterclass

18 July 2022 (Mon), 5pm Singapore/HK time

Macquarie Bank’s liquidity and operational risk capital requirements have been increase by the Australian Prudential Regulation Authority (APRA) following multiple breaches to prudential and reporting standards. Macquarie Bank is now required to hold an A$500mn ($379mn) operational capital overlay as the APRA said, “These resulted from deficiencies in Macquarie Bank’s ability to manage the operational risk inherent in the complex intra-group structure, within which it transacts with its related entities”. APRA also added that a 15% add-on to the net cash outflow component of their Liquidity Coverage Ratio (LCR) calculation and a 1% adjustment to the available stable funding component of its Net Stable Funding Ratio (NSFR) calculation would be required. This will take effect from today. The bank responded by stating, “We will work with APRA through a period of intensified supervision to advance this work as quickly as possible.” This is likely to be the reason for the Aussie lender to postpone its proposed sterling denominated bond issuance on Wednesday with the bank citing “reasons unrelated to the market” for the postponement.

Macquarie Bank’s dollar bonds were slightly lower – its 1.34% 2027s were down 0.2 to 97.95, yielding 1.8%.

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