Bendigo and Adelaide Bank Ltd (ASX: BEN) faces mounting pressure after regulators delivered a one-two punch on Wednesday, imposing a $50 million capital charge while launching a formal enforcement investigation into compliance failures.
The regional banking heavyweight has been thrust into the spotlight after an independent review uncovered serious deficiencies in its money laundering detection systems. AUSTRAC is investigating compliance with anti-money laundering laws.
Bendigo and Adelaide Bank Limited
Suspicious Activity Went Undetected for Six Years
The trouble began when suspicious transactions at a single Bendigo Bank branch apparently went undetected for six years until 1st August 2025. The bank self-reported the issue and commissioned Deloitte to conduct an independent review.
What Deloitte found was alarming. The deficiencies extended far beyond one branch, revealing systemic weaknesses in how the bank identifies, mitigates and manages money laundering and terrorism financing risks.
Australian Prudential Regulation Authority (APRA) Chair John Lonsdale didn’t mince words:
“Although Bendigo and Adelaide Bank is financially sound and comfortably above its core capital and liquidity requirements, we are concerned there may be significant gaps in its risk management framework that need to be addressed urgently.”
The Regulatory Response
APRA has imposed a $50 million operational risk capital add-on effective 1st January 2026. This charge will remain until the bank completes remedial measures to the regulator’s satisfaction.
The financial impact includes:
- CET1 ratio expected to drop by approximately 17 basis points
- Current CET1 ratio sits at 11.19% as of 30th November 2025
- Still above board targets and regulatory minimums
Meanwhile, AUSTRAC has commenced an enforcement investigation focusing on potential contraventions of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006.
AUSTRAC Acting CEO Katie Miller confirmed: “Our investigation will examine Bendigo Bank’s compliance with the AML/CTF Act and inform any further AUSTRAC action.”
Share Price Takes a Beating
The market has not been kind to Bendigo Bank in 2025. Shares have declined approximately 20% year-to-date, significantly underperforming the ASX 200’s banking sector.
On Wednesday morning, BEN shares opened at $10.90 before sliding to $10.18, representing a 7.45% drop. The stock closed at $11.00 the previous day.
Recent trading metrics paint a concerning picture:
- 52-week range: $9.960 – $10.340
- Market capitalisation: approximately $5.84 billion
- Trading volumes spiked to over 5 million shares
Bendigo and Adelaide Bank Ltd Price Chart
Investors clearly remain uncertain about potential penalties and the extent of compliance issues across the bank’s operations.
What Management Is Saying
Bendigo Bank CEO and Managing Director Richard Fennell acknowledged the severity of the situation:
“Bendigo Bank has taken a number of steps to improve its risk capability and strengthen its risk culture over the last 12 months however I recognise the need to intensify our focus and our efforts.”
He added that the board and executive team are prioritising a broader uplift in non-financial risk maturity, particularly around compliance expectations.
The bank has committed to:
- Conducting a root cause analysis of non-financial risk management issues
- Strengthening frameworks and controls
- Maintaining constructive engagement with regulators
- Providing cost estimates for remediation once determined
Broader Implications for Australian Banking
This enforcement action arrives amid heightened regulatory scrutiny across Australia’s financial sector. The big four banks have faced their own compliance challenges in recent years.
APRA has made clear it won’t tolerate gaps in risk management frameworks, particularly around anti-money laundering controls. The regulator is concerned that similar weaknesses may exist across Bendigo Bank’s broader operations.
For context, Westgate and Commonwealth Bank have previously faced significant penalties for AML/CTF breaches. AUSTRAC fined Commonwealth Bank $700 million in 2018 for serious compliance failures.
The Road Ahead
Bendigo Bank faces several critical challenges:
Immediate priorities:
- Complete APRA’s required root cause analysis
- Address deficiencies identified in the Deloitte review
- Cooperate fully with AUSTRAC’s enforcement investigation
Longer-term concerns:
- Potential financial penalties from AUSTRAC
- Reputational damage affecting customer confidence
- Ongoing costs of compliance upgrades
The $50 million capital charge won’t severely impact the bank’s financial stability. However, the unknown size of potential AUSTRAC penalties creates uncertainty for shareholders.
Investor Outlook
Despite the turmoil, Bendigo Bank remains financially sound with strong capital ratios. The bank owns Up Bank, a popular digital banking platform, and maintains a network of over 500 community branches across Australia.
Analyst consensus target price sits at $11.92, suggesting modest upside from current levels. However, this was set before Wednesday’s announcement.
The bank’s dividend yield of approximately 6% may attract income-focused investors. Yet the regulatory cloud hanging over the stock could persist for months until AUSTRAC completes its investigation.
For now, Bendigo Bank faces an uncertain period as regulators scrutinise its risk management practices and the full extent of compliance failures becomes clear.
