CBA share price falls despite APRA update

The Commonwealth Bank of Australia (ASX: CBA) share price is falling with the market on Friday.

In morning trade, the banking giant’s shares are down 1% to $92.27.

What’s going on with the CBA share price?

Investors have been selling the bank’s shares today despite a positive announcement out of Australian Prudential Regulation Authority (APRA).

According to the release, APRA has removed the remaining $500 million capital add-on applied to CBA to address previous weaknesses in its governance, accountability, and risk culture frameworks and practices.

The regulator initially imposed the $1 billion capital add-on on the bank in May 2018 in response to the final report of the Prudential Inquiry into the Commonwealth Bank of Australia.

APRA notes that the inquiry concluded that “CBA’s continued financial success dulled the senses of the institution.” This was particularly in relation to the management of non-financial risks. As a result, an extensive remediation plan was established to address the identified shortcomings.

The good news is that APRA has been satisfied with the remediation program and notes that CBA has addressed all recommendations. This follows validation work undertaken by APRA to ensure all remediations were sustainable and well-embedded.

CBA response

CBA has responded to the news. It highlights that the removal of the remaining operational risk capital overlay of $500 million will represent an increase in its Common Equity Tier 1 capital of 15 basis points.

CBA’s CEO, Matt Comyn, commented:

We are committed to ensuring the improvements we’ve made to our governance, culture and risk management practices are continuously improved and sustained.

The post CBA share price falls despite APRA update appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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