The Australian Prudential Regulation Authority (APRA) has announced additional capital requirements for three major banks, reflecting the higher operational risk identified in their risk governance self-assessments.

APRA wrote to Australia and New Zealand Banking Group (ANZ), National Australia Bank (NAB), and Westpac advising of an increase in their minimum capital requirements of $500m each. The capital add-ons will apply after the banks have completed their planned remediation to boost risk management, and closed gaps identified in their self-assessments.

The additional capital requirements followed APRA’s May 2018 decision, applying a $1bn capital add-on to Commonwealth Bank of Australia (CBA) in response to a prudential inquiry into the major bank.

“Australia’s major banks are well-capitalised and financially sound, but improvements in the management of non-financial risks are needed. This will require a real focus on the root causes of the issues that have been identified, including complexity, unclear accountabilities, weak incentives and cultures that have been too accepting of long-standing gaps,” APRA Chair Wayne Byres said.

The country’s major banks play a vital role in the financial system’s stability, and APRA expects them to have the highest standards in risk governance, Byres said.