A man passes a logo displayed outside a Westpac Banking Corp. branch in Sydney, Australia, August 19, 2025. REUTERS/Hollie Adams

(Reuters) -Australia's prudential regulator said on Wednesday that it has removed the additional A$500 million ($324.15 million) capital add-on on Westpac after the bank completed a required multi-year risk transformation program.

In a separate statement, Westpac said the removal of the capital add-on will increase its common equity tier 1 (CET1) capital ratio by about 17 basis points, reflecting a reduction in risk-weighted assets of A$6.25 billion.

In 2019, the Australian Prudential Regulation Authority pre-emptively imposed a A$1 billion capital add-on in two tranches on the country’s third largest lender.

This was followed by a 2020 investigation, which led Westpac to commit to remediating specific prudential weaknesses identified by APRA.

Last year, APRA halved the capital add-on requirement.

"Satisfied that this program is complete, and the specific prudential issues identified by APRA have been addressed, APRA has removed the remaining tranche of A$500 million capital add-on, with immediate effect," APRA said.

"The positive changes in how we manage risk must now be maintained and continually strengthened," Westpac CEO Anthony Miller said.

($1 = 1.5425 Australian dollars)

(Reporting by Sneha Kumar in Bengaluru; Editing by Shailesh Kuber and Alan Barona)