Australian regulator ramps up bank stress-testing program

SYDNEY, Aug 30 (Reuters) - Australia’s banking watchdog will stress test the country’s banks every year, instead of the current three-year cycle, ramping up oversight of a sector that has been marred by misconduct.

The Australian Prudential Regulatory Authority (APRA) unveiled the shift as part of a corporate plan released on Thursday, which is aimed at maintaining resilience in the financial system.

A government-commissioned report released last month told APRA it had to be more forceful and less “discreet”, following revelations of widespread misconduct across financial institutions during the 2018 public hearings of the Royal Commission inquiry into the sector.

“APRA is well aware of the heightened expectations of the organisation,” APRA Chairman Wayne Byres said in a statement accompanying the four-year corporate plan.

“We will place greater emphasis on the supervision of ‘non-financial risks’ such as culture and accountability,” he added.

In the most recent series of stress tests in 2017, all 13 of the country’s largest banks passed the “severe but plausible” scenarios applied by the regulator, despite projected losses of about A$40 billion in home loans alone. (Reporting by Paulina Duran; Editing by Jane Wardell)