The Australian Prudential Regulation Authority (APRA) released a new set of frequently asked questions (FAQs) on APS 222, the prudential standard on associations with related entities. APRA also proposed minor amendments to centralize the definition of significant financial institution within the prudential framework, with the comment period open until May 02, 2022.
Under the proposed approach, all prudential standards would use the same definition of a significant financial institution. Centralizing this definition would not result in any changes to the quantitative criteria (asset thresholds) that have been used to determine the significant financial institutions in existing prudential standards, but it would lead to some small changes to the qualitative criteria. A significant financial institution means an APRA-regulated entity that is either
- not a foreign authorized deposit-taking institution, a Category C insurer or an EFLIC and has total assets in excess of AUD 20 billion in the case of an authorized deposit-taking institution; AUD 10 billion in the case of a general insurer or life company; AUD 3 billion in the case of a private health insurer; or AUD 30 billion in the case of a single register superannuation entity (RSE) operated by an RSE licensee, or if the RSE licensee operates more than one RSE where the combined total assets of all RSEs exceeds this amount; or
- determined as such by APRA, having regard to matters such as the complexity in its operations or its membership of a group.
This aligned definition would be located in the central definitions prudential standards for banking and insurance, as set out in Attachment A to the consultation letter. Prudential standards that differentiate requirements for significant and non-significant financial institutions would then be edited to reference this common definition. Amendments would be made to the Prudential Standards CPS 511 Remuneration, APS 110 Capital Adequacy, APS 112 Capital Adequacy: Standardized Approach to Credit Risk, and APS 115 Capital Adequacy: Standardized Measurement Approach to Operational Risk. APRA does not expect the proposed changes to qualitative criteria to materially alter the intended application of the significant financial institution regime. The main impact relates to foreign-owned authorized deposit-taking institutions. Following the finalization of the proposed amendments, APRA plans to make public the list of significant financial institutions for all industries.
Keywords: Asia Pacific, Australia, Banking, APS 222, Reporting, APS 221, ARF 222, Significant Financial Institutions, Regulatory Capital, Basel, Proportionality, Related Party Transactions, APS 110, APS 112, APS 115, Securitization Framework, APRA
Previous ArticleESRB Issues Updates on National Macro-Prudential Measures
The European Commission (EC) published the Delegated Regulation 2022/786 with regard to the liquidity coverage requirements for credit institutions under the Capital Requirements Regulation (CRR).
The European Banking Authority (EBA) published the final draft regulatory technical standards specifying the criteria to identify shadow banking entities for the purposes of reporting large exposures.
The European Insurance and Occupational Pensions Authority (EIOPA) published a report assessing insurers' exposure to physical climate change risks
The Network for Greening the Financial System (NGFS) published two reports to aid central banks and regulators in their oversight of the financial sector and in their central bank operations
The European Commission (EC) published the results of a public consultation, held in October 2021, on the review of the Web Accessibility Directive.
The Monetary Authority of Singapore (MAS) and the SC-STS are jointly consulting, until June 10, 2022, on setting adjustment spreads for the conversion of legacy SOR contracts to SORA reference rate.
The Office of the Superintendent of Financial Institutions (OSFI) published the strategic plan for 2022-2025 and the departmental plan for 2022-23.
The European Banking Authority (EBA) is consulting, until August 31, 2022, on the draft implementing technical standards specifying requirements for the information that sellers of non-performing loans (NPLs) shall provide to prospective buyers.
The European Council and the Parliament reached an agreement on the revised Directive on security of network and information systems (NIS2 Directive).
The European Banking Authority (EBA) published the final draft regulatory technical standards specifying information that crowdfunding service providers shall provide to investors on the calculation of credit scores and prices of crowdfunding offers.