APRA FAQs Clarify Regulatory Capital Approach for Loan Deferrals
APRA published a set of frequently asked questions (FAQs) to provide authorized deposit-taking institutions with an up-to-date guidance on supervisory expectations during the period of disruption driven by COVID-19. The FAQs clarify the regulatory capital approach for loan repayment deferrals and the guidance for serviceability assessments in the Prudential Practice Guide APG 223 on residential mortgage lending. The FAQs are expected to be updated periodically over the coming months.
The FAQs set out that the regulatory capital approach of APRA specifies that, over the next six months, banks do not need to treat the period of the repayment deferral as a period of arrears for capital purposes. As per APRA, the regulatory capital approach can be applied to a broad class of otherwise performing loans on which authorized deposit-taking institutions grant repayments deferrals. This includes loans that are less than 90 days past due and not impaired at the time deferral was granted. Authorized deposit-taking institutions should publicly disclose the nature and terms of any repayment deferrals given to a broad class of loans and the volume of loans to which they are applied. These institutions should also closely monitor the portfolio credit risk of this cohort of loans, and are required to report to APRA information on the volume and risk profile of this segment of the portfolio.
Related Links
Keywords: Asia Pacific, Australia, Banking, Residential Mortgage Lending, Credit Risk, COVID-19, FAQ, Regulatory Capital, Loan Moratorium, Basel, 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.
Pierre-Etienne Chabanel
Brings expertise in technology and software solutions around banking regulation, whether deployed on-premises or in the cloud.
Previous Article
MAS Amends Notices Related to Residential Property LoansRelated Articles
BCBS Amends Guidelines on Sound Management of AML/CFT Risks
BCBS amended the guidelines on sound management of risks related to money laundering and financing of terrorism (ML/FT).
US Agencies Finalize Amendments to Swap Margin Rule
US Agencies (Farm Credit Administration, FDIC, FED, FHFA, and OCC) finalized changes to the swap margin rule to facilitate implementation of prudent risk management strategies at banks and other entities with significant swap activities.
PRA Letter Sets Expectations on Approach to Managing Climate Risks
PRA published a letter that builds on the expectations set out in the supervisory statement (SS3/19) on enhancing banks' and insurers' approaches to managing the financial risks from climate change.
EBA Guidelines on Treatment of Structural Foreign Exchange Under CRR
EBA finalized the guidelines on treatment of structural foreign-exchange (FX) positions under Article 352(2) of the Capital Requirements Regulation (CRR).
FSB Issues Statement on Impact of COVID-19 Crisis on Benchmark Reform
FSB published a statement on the impact of COVID-19 pandemic on global benchmark transition.
IAIS Publishes List of Internationally Active Insurance Groups
IAIS published the list of Internationally Active Insurance Groups (IAIGs) publicly disclosed by group-wide supervisors.
FED Temporarily Revises FR Y-9C With Respect to PPPLF and CARES Act
FED has temporarily revised the reporting form on consolidated financial statements for holding companies (FR Y-9C; OMB No. 7100-0128).
EC Launches Consultation on Review of Solvency II Directive
EC launched a consultation on the review of the key elements of Solvency II Directive, with the comment period ending on October 21, 2020.
ECB Consults on Supervisory Approach to Consolidation in Banking
ECB launched a consultation on the guide that sets out supervisory approach to consolidation projects in the banking sector.
IAIS on Package for 2020 Data Collection on ICS and Aggregation Method
IAIS published technical specifications, questionnaires, and templates for 2020 Insurance Capital Standard (ICS) and Aggregation Method data collections.
