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APRA accepts enforceable undertaking from Mega ICBC

27 Aug 2009

The Australian Prudential Regulation Authority (APRA) today accepted an enforceable undertaking from Mega International Commercial Bank Company Limited (Mega ICBC), headquartered in Taipei, Taiwan, in relation to the operation of its Australian branch.
Mega ICBC is authorised under the Banking Act 1959 to conduct banking business in Australia as a foreign authorised deposit-taking institution. As a result of a review of the bank's activities in Australia, APRA become concerned that Mega ICBC had failed to meet various prudential standards and other requirements relating to the Australian branch’s systems of governance, risk management and internal control. Mega ICBC has acknowledged APRA’s concerns and admitted that its practices fell seriously short of acceptable banking practice. As a result, the bank has undertaken to complete a substantial program of remedial action to rectify shortcomings in its current operations.
The remedial program includes a temporary cessation of account-opening activity until otherwise agreed by APRA, an overhaul of the branch's risk management and internal control systems, and a review of the suitability of senior management in Australia. Mega ICBC has confirmed that the heads of the bank’s branch offices in Sydney and Brisbane have already been replaced.
Mega ICBC has also undertaken to have its remedial actions reviewed by an independent expert, to be appointed by Mega ICBC subject to APRA's approval.
The enforceable undertaking provides Mega ICBC with an opportunity to address deficiencies that APRA viewed as serious, but not beyond rectification. APRA considered a number of alternative courses of action but, taking into account Mega ICBC’s cooperation throughout, was ultimately prepared to accept the bank’s strong commitment to carrying on banking business in Australia and to do all things necessary to meet prudential requirements and thereby maintain its authorisation.
A copy of the enforceable undertaking is available on the APRA website
The Australian Prudential Regulation Authority (APRA) is the prudential regulator of the financial services industry. It oversees banks, credit unions, building societies, general insurance and reinsurance companies, life insurance, friendly societies, and most members of the superannuation industry. APRA is funded largely by the industries that it supervises. It was established on 1 July 1998. APRA currently supervises institutions holding approximately $3.4 trillion in assets for 21 million Australian depositors, policyholders and superannuation fund members.