APRA Consults on Reporting Standards Under Capital Framework for Banks
The Australian Prudential Regulation Authority (APRA) is seeking comments, until June 07, 2022, on the proposed reporting standards under the updated capital framework for banks.
The APRA consultation includes the interim reporting standards in tandem with the updated capital adequacy and credit risk capital requirements for authorized deposit-taking institutions. APRA published the draft interim reporting standards that will accompany the prudential standards on capital adequacy (APS 110), standardized approach to credit risk (APS 112), and internal ratings-based approach to credit risk (APS 113): ARS 110.0 on capital adequacy, ARS 112.0 on standardized approach to credit risk, and ARS 113.0 on internal ratings-based approach to credit risk. ARS 110.0 maintains the structure of the current reporting form, with updates that align it with the new prudential standards. These updates include more detailed information on subsidiaries and the addition of data items related to leverage ratios of authorized deposit-taking institutions. ARS 112.0 and ARS 113.0 will use a table-based format made possible by the implementation of APRA Connect, moving away from the current form-based collections. The new standards will replace the below reporting standards and their associated reporting forms, effective for the reporting period ending March 31, 2023:
- ARS 112.1 on standardized credit risk—on-balance sheet assets
- ARS 112.2 on standardized credit risk—off-balance sheet exposures
- ARS 113.0 on foundation internal-ratings based approach to credit risk
- ARS 113.1 on advanced internal-ratings based approach to credit risk
- ARS 113.2 on internal ratings-based approach to credit risk—specialized lending supervisory slotting
- ARS 113.3 on internal ratings-based approach to credit risk—retail
- ARS 113.4 on internal ratings-based approach to credit risk—other assets, claims, and exposures
APRA has identified three other reporting standards that require minor updates: ARS 180.0 on counterparty credit risk, ARS 221.0 on large exposures, and ARS 223.0 on residential mortgage lending. No changes are expected to the data submitted under these three reporting standards. APRA intends to use APRA Connect to collect submissions for ARS 110.0, ARS 112.0, ARS 113.0, and ARS 115.0 data. Versions of the draft collections for ARS 110.0, ARS 112.0, and ARS 113.0 will be available in a test environment before the end of this consultation. APRA also clarified expectations for data to be submitted for September 2022 and December 2022 quarter-ends in parallel with the existing reporting. For the September and December submissions, institutions are expected to explain when the submission does not comply with the prudential requirements, such as the use of unapproved models and proxies. APRA is committed to meeting the January 01, 2023 implementation date and proposes for the interim reporting standards and consequential/other updates to be effective for the reporting period ending March 31, 2023.
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Keywords: Asia Pacific, Australia, Banking, Basel, Regulatory Capital, Credit Risk, Standardized Approach, IRB Approach, ARS 110, ARS 112, ARS 113, Large Exposures, Lending, APRA, Headline
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