APRA released a response paper setting out revisions to the prudential framework for large exposures of authorized deposit-taking institutions. APRA will require authorized deposit-taking institutions to implement most aspects of the revised Prudential Standard APS 221 Large Exposures (APS 221) by January 01, 2019. A transition period will be provided for provisions related to groups of connected counterparties and structured vehicles, allowing authorized deposit-taking institutions full implementation of the large exposures framework by no later than January 01, 2020.
The large exposures framework of APRA aims to limit the impact of losses when a large counterparty defaults and to restrict the potential for problems in one entity from spreading across the financial system. The core components of the new large exposures framework are:
- Reference to tier 1 capital as a basis for determining large exposures
- Recalibration of existing large exposure limits and the introduction of a lower limit on domestic systemically important bank (D-SIB) to D-SIB exposures
- Stronger set of requirements for measuring exposure values and for assessing groups of connected counterparties
- Prudential Standard APS 221 Large Exposures (PDF)
- ARS 221 Forms and Instructions (PDF)
- Response Paper (PDF)
- April 2017 Consultation and Responses
Effective Date: January 01, 2020
Keywords: Asia Pacific, Australia, Banking, Large Exposures, APS221, ARS221, APRA
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