APRA Issues FAQ on Capital Standard, Closes Westpac Investigation
APRA published a frequently asked question (FAQ) on its expectations for historical rate rollovers on non-foreign exchange contracts in the context of APS 180, which is the prudential standard on capital adequacy for counterparty credit risk exposures. Under paragraph 17 of APS 180, the historical rate rollovers are permitted only on foreign exchange contracts and not on non-foreign-exchange transactions. APRA is currently considering this position, including potentially some limited flexibility for authorized deposit taking institutions in certain circumstances to transact historical rate rollovers on non-foreign exchange contracts where APRA is comfortable with the oversight, limits, risk assessment, and controls. This could include cases where the underlying transaction has been delayed and there is a clear expectation of delivery in the short term. APRA will assess the transactions and consider an adjustment to APS 180 on a case-by-case basis, for individual institutions.
In another development, APRA closed its investigation into the possible breaches of the Banking Act 1959, including Banking Executive Accountability Regime (BEAR), by Westpac Banking Corporation. However, Westpac remains subject to a court enforceable undertaking to implement an integrated risk governance remediation plan to uplift risk governance across its business, with ongoing independent review over its progress. The $1 billion operational risk capital add-on, which reflects the heightened operational risk profile of the bank, will also remain in place until Westpac completes remediation, under the court enforceable undertaking, to the satisfaction of APRA.
Related Links
Keywords: Asia Pacific, Australia, Banking, FAQ, BEAR, Westpac, Historical Rate Rollovers, APS 180, Regulatory Capital, Basel, Derivatives, APRA
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Patrycja Oleksza
Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area
Previous Article
MFSA Statement on Consultation on Corporate Governance FrameworkNext Article
BSP Establishes Guidelines on Open Finance FrameworkRelated Articles
EC to Defer Application of SFDR Standards Till July 2022
The European Commission (EC) announced plans to defer the application of 13 regulatory technical standards under the Sustainable Finance Disclosure Regulation (2019/2088) by six months, from January 01, 2022 to July 01, 2022.
BoE Consults on Approach to Setting MREL, Publishes Bail-In Guidance
The Bank of England (BoE) published a consultation paper on approach to setting minimum requirement for own funds and eligible liabilities (MREL), an operational guide on executing bail-in, and a statement from the Deputy Governor Dave Ramsden.
EBA Seeks Views on Proportionality Assessment Methodology
The European Banking Authority (EBA) is seeking preliminary input on standardization of the proportionality assessment methodology for credit institutions and investment firms.
US Agencies Propose Changes to Call Reports and Instructions
Certain regulatory authorities in the US are extending period for completion of the review of certain residential mortgage provisions and for publication of notice disclosing the determination of this review until December 20, 2021.
PRA Finalizes Rulebook Definition of Higher Paid Material Risk-Taker
The Prudential Regulation Authority (PRA) published the policy statement PS18/21, which introduces an amendment in the definition of "higher paid material risk taker" in the Remuneration Part of the PRA Rulebook.
EBA Examines Asset Encumbrance in Banking Sector
The European Banking Authority (EBA) published its annual report on asset encumbrance in banking sector.
EBA Publishes Methodological Guide to Mystery Shopping
The European Banking Authority (EBA) published a methodological guide to mystery shopping.
APRA Issues Update on Capital Reform Policy Settings for Banks
The Australian Prudential Regulation Authority (APRA) released a letter to authorized deposit-taking institutions to provide an update on key policy settings for the capital framework reforms, which will come into effect from January 01, 2023.
CPMI-IOSCO Assess Continuity Planning of Market Infrastructures
The Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) published a report that assesses the business continuity planning activities of financial market infrastructures or FMIs.
ESMA Responds to Proposal Related to Sustainability Standards Board
The European Securities and Markets Authority (ESMA) has responded to the IFRS consultation on targeted amendments to the IFRS Foundation constitution to accommodate an International Sustainability Standards Board (ISSB) to set IFRS Sustainability Standards.
