The Australian Prudential Regulation Authority, HIH and the NAB (A) 2005-13.1
24 June 2005● Research
In August 2003, after only a few weeks as the head of the Australian Prudential Regulation Authority (APRA), the body responsible for supervising the deposit-taking, insurance and superannuation sectors, John Laker faced a problem. APRA investigations had indicated shortcomings in some of the risk management controls of one of Australia’s largest financial institutions, the National Australia Bank (NAB). Laker was now faced with the task of determining APRA’s response to the bank’s situation. Complicating the situation was that APRA was still reeling from the most demoralising episode in its brief history – the collapse of Australia’s second largest insurer-HIH – and a subsequent Royal Commission that had found while APRA could not have prevented the company’s failure, it had not recognised the severity of the situation and responded too slowly.
This case can be used to discuss risk management of the financial system, and can also be used to look at how organisations can operate effectively in periods of transition and under public scrutiny. Part A looks at APRA’s establishment and describes its response to the collapse of HIH.
- Part B looks at APRA’s approach to fixing problems at the NAB, seen by some as a clear sign of APRA being unafraid to exercise its powers, and by others as an overreaction.
- Authors: Marinella Padula
- Published Date: 24 June 2005
- Author Institution: ANZSOG
- Featured Content Length: 9
- Content Length: 16
- Product Type: Part A, Primary resources