Consultation on Governance Review Discussion Paper

We refer to the invitation from the Australian Prudential Regulation Authority (APRA) to comment on the Governance Review Discussion Paper pertaining to core prudential standards and guidance on governance of banks, insurers and RSE licensees. We appreciate the opportunity to provide feedback as APRA develops its draft revisions to governance requirements for consultation in H1 2026.

Norges Bank Investment Management (NBIM) is the investment management division of the Norwegian Central Bank and is responsible for investing the Norwegian Government Pension Fund Global. NBIM is a globally diversified investment manager with AUD2,812 billion invested in over 65 countries as of 31 December 2024, of which AUD33.8 billion was invested in the shares of 318 Australian listed companies, including the listed banks and insurers on APRA’s significant financial institutions (SFI) register.

As an investor with around 70 percent of our holdings in listed equity, we need thriving public markets that foster economic value creation. Robust corporate governance is fundamental to resilient public markets and long-term value creation by companies. Understanding board perspectives enhances our investment analysis and over time, this contributes positively to our investment performance. In addition, we believe board effectiveness and the level of minority shareholder protection impact our returns in the long term, and these factors therefore inform our voting decisions.

The ASX Corporate Governance Principles and Recommendations (ASX CGP), applied on an “if not, why not” basis, supports good governance practices in listed banks and insurers, to which we are directly exposed. However, we believe that APRA’s efforts to address weaknesses in the corporate governance practices of regulated entities are necessary and welcome for the following reasons:

• Strong governance is a key determinant of long-term viability of banks and increased their likelihood of a positive outcome during the 2008 financial crisis.[1] APRA has also noted that 78% of regulated entities subject to heightened risk-based supervision had underlying governance concerns.
• The failure of smaller banks can cause systemic effects through interbank lending contagion and a loss of confidence in the resilience of the banking system.[2]
• Banking failure can adversely impact real economy companies, including listed companies of which we are shareholders, through loss of access to bank lending or higher borrowing costs.[3]
• APRA requirements should be aligned with international governance standards from Basel Committee for Banking Supervision (BCBS) and International Association of Insurance Supervisors (IAIS) and global best practice.

Please find in the annex our comments on the proposals and responses to relevant questions, pertaining only to banks and insurers. We are not shareholders of the RSE licensees and refrain from providing any views on them.

We thank you for considering our perspective and remain at your disposal should you wish to discuss these matters further.

Yours sincerely

Carine Smith Ihenacho   
Chief Governance and Compliance Officer

Jeanne Stampe
Lead Policy Advisor

[1] FDIC Office of the Inspector General, “Acquisition, Development, and Construction Loan Concentration Study,” Report EVAL-13-001, October 2012, Section “The Aftermath of the Crisis: Lessons Learned for Supervision,”

[2] Basel Committee on Banking Supervision Oct 2024 - The 2023 banking turmoil and liquidity risk: a progress report A report to G20 Finance Ministers and Central Bank Governors

[3] Brewer et al (2003). The value of banking relationships during a financial crisis: Evidence from failures of Japanese banks. Federal Reserve Bank of Chicago Working Papers No. 2002-20, 2002