Featured Product

    APRA Consults on Improvements to Capital Framework for Deposit Takers

    August 14, 2018

    APRA published a discussion paper that outlines the potential approaches to adjust the capital framework for authorized deposit-taking institutions to make capital ratios more transparent, comparable, and flexible. These approaches focus on amending disclosure requirements and the way in which institutions would be required to calculate and report capital ratios, without altering the quantum and risk-sensitivity of capital requirements. Written submissions must be sent by November 02, 2018.

    The approaches would not change the amount of capital authorized deposit-taking institutions are required to hold beyond the unquestionably strong capital benchmarks announced in July 2017. Rather, APRA is considering whether to alter the way authorized deposit-taking institutions’ capital requirements are calculated and disclosed to facilitate greater domestic and international comparability and transparency of capital strength. The discussion paper outlines two general approaches designed to aid authorized deposit-taking institutions in representing and communicating their capital strength:

    • Under the first approach, authorized deposit-taking institutions would continue using existing definitions of capital and risk-weighted assets, but APRA would develop a methodology allowing them to improve the credibility and robustness of internationally comparable capital ratio disclosures
    • Under a second approach, APRA would change the way authorized deposit-taking institutions calculate capital ratios to instead use more internationally harmonized definitions of capital and risk-weighted assets. To maintain the strength and risk-sensitivity of the capital framework, there would need to be corresponding increases in minimum ratio and/or capital buffer requirements.

    The discussion paper also proposes measures to make the capital framework more flexible in times of stress, including by increasing the size of regulatory capital buffers relative to minimum regulatory capital requirements. APRA is open to considering these approaches independently or in combination, or indeed retaining its current methodology, and is seeking industry feedback on whether the benefits of the suggested approaches outweigh the regulatory burden and associated increase in complexity. APRA intends to consult on draft revised prudential standards incorporating the outcome of this consultation in 2019. APRA expects that final prudential standards would be released by mid-2020. In finalizing the revised capital framework, APRA will have regard to the Basel III implementation timetable. However, as indicated in the February 2018 Discussion Paper, it is likely that the revised prudential requirements would commence from January 01, 2021


    Related Links

    Comment Due Date: November 02, 2018

    Keywords: Asia Pacific, Banking, Capital Framework, Basel III, Regulatory Capital, Disclosures, APRA

    Featured Experts
    Related Articles

    APRA Publishes Submission on Fintech and Regtech

    APRA published its submission, to the Senate Select Committee, on financial technology and regulatory technology.

    January 21, 2020 WebPage Regulatory News

    ECB Consults on Guideline on Threshold for Credit Obligations Past Due

    ECB published a draft guideline, along with the frequently asked questions (FAQs), on the definition of the materiality threshold for credit obligations past due for less significant institutions.

    January 20, 2020 WebPage Regulatory News

    BIS Discusses Role of Central Banks in Addressing Climate Change Risks

    BIS published a book that reviews ways of addressing the climate change risks within the financial stability mandate of central banks.

    January 19, 2020 WebPage Regulatory News

    FSB Report Examines Global Nonbank Financial Intermediation Activity

    FSB published the ninth annual report examining the global non-bank financial intermediation activity.

    January 19, 2020 WebPage Regulatory News

    OSFI Publishes Instruction Guide on Solvency Information Return

    OSFI published an instruction guide to assist administrators of pension plans in completing the Solvency Information Return that is required to be filed with OSFI.

    January 17, 2020 WebPage Regulatory News

    EU Amends IFRS 9 Rule, Changes Concern Interest Rate Benchmark Reforms

    EU published Regulation 2020/34 regarding the International Accounting Standard (IAS) 39 and International Financial Reporting Standards (IFRS) 7 and 9.

    January 16, 2020 WebPage Regulatory News

    FDIC and OCC Issue Statement on Heightened Cyber Security Risk

    In response to the heightened cyber-security risk facing the financial services industry and other critical business sectors, FDIC and OCC issued an interagency statement on heightened cyber-security risk.

    January 16, 2020 WebPage Regulatory News

    BCRA Updates Regulation on Capital Requirements and Information Regime

    BCRA updated the rules on minimum capital requirements for financial entities and on certain aspects of the information transparency regime for quarterly and annual supervision.

    January 16, 2020 WebPage Regulatory News

    BoE and FCA Outline Next Steps for LIBOR Transition in 2020

    BoE, FCA, and the Working Group on Sterling Risk-Free Reference Rates (RFRWG) have published a set of documents that outline the LIBOR transition priorities and milestones for 2020.

    January 16, 2020 WebPage Regulatory News

    BIS to Expand Central Bank Membership

    BIS is to expand its central bank membership base and to increase collaboration in its work as a forum for international cooperation and as a hub for central banks and other financial authorities.

    January 14, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 4511