Featured Product

    APRA and RBA Release Statement on Actions to Address Climate Risk

    November 04, 2021

    The Australian Prudential Regulation Authority (APRA) and the Reserve Bank of Australia (RBA) issued a joint statement on the actions being taken to ensure that the financial system is prepared to respond to the climate change risks. In the statement, the authorities focus on integrating climate-related risks into financial stability monitoring and micro-supervision, analyzing the effect of climate risks on the macroeconomy and financial stability, building awareness and intellectual capacity and encouraging knowledge sharing, and integrating sustainability factors into own operations.

    APRA is leading a bottom-up supervisory climate vulnerability assessment exercise with the five largest Australian banks under its supervision, using as its basis the Network for Greening the Financial System (NGFS) scenarios that are being adapted to explore the Australian conditions. RBA is assisting APRA with the exercise, which commenced in 2021 and whose results are expected to be published in 2022. The climate vulnerability assessment aims to assess potential financial exposure to climate risk, understand how banks may adjust business models and implement management actions in response to different scenarios, and foster improvement in climate risk management capabilities. Additionally, in 2021, APRA plans to finalize prudential guidance to assist supervised entities to identify, monitor, and manage the climate risks. The prudential practice guide has been informed by stakeholder consultation and provides guidance on prudent practices in the management of financial risks arising from climate change, including with respect to governance, risk management, scenario analysis, and disclosure.

    APRA is also considering a periodic climate risk self-assessment survey to assist in understanding the financial sector’s alignment to the guidance. RBA will conduct analysis to monitor the implications of climate change and related mitigation policies for the economy and the transmission of monetary policy through financial markets and the banking system to households and businesses. RBA plans to continue to augment its forecasting models and its broader suite of macroeconomic models to understand the macroeconomic implications of different climate risks, including how climate risks translate into financial stability risks. APRA and RBA work with other regulatory agencies through the CFR Climate Change Working Group. Internationally, RBA and APRA will continue to share knowledge through forums including the NGFS, the Financial Stability Board (FSB), the Bank for International Settlements (BIS), and the Executives’ Meeting of East Asia Pacific Central Banks (EMEAP).

     

    Related Links

    Keywords: Asia Pacific, Australia, Banking, Climate Change Risk, Disclosures, Prudential Guidance, Stress Testing, Scenario Analysis, ESG, Financial Stability, NGFS, RBA, APRA

    Featured Experts
    Related Articles
    News

    APRA Penalizes Heritage Bank for Incorrect Reporting of Capital

    The Australian Prudential Regulation Authority (APRA) found that Heritage Bank Limited had incorrectly reported capital because of weaknesses in operational risk and compliance frameworks, although the bank did not breach minimum prudential capital ratios at any point and remains well-capitalized.

    November 29, 2021 WebPage Regulatory News
    News

    OSFI Releases Annual Report 2021-2022

    The Office of the Superintendent of Financial Institutions (OSFI) released the annual report for 2020-2021.

    November 29, 2021 WebPage Regulatory News
    News

    APRA Finalizes Guidance on Management of Climate Change Risks

    The Australian Prudential Regulation Authority (APRA) released the final Prudential Practice Guide on management of climate change financial risks (CPG 229) for banks, insurers, and superannuation trustees.

    November 26, 2021 WebPage Regulatory News
    News

    EBA Publishes Single Rulebook Q&A Updates in November 2021

    The European Banking Authority (EBA) Single Rulebook Question and Answer (Q&A) tool updates for this month include answers to 10 questions.

    November 26, 2021 WebPage Regulatory News
    News

    EC Proposes New Measures Under Capital Markets Union Package

    The European Commission (EC) has adopted a package of measures related to the Capital Markets Union.

    November 25, 2021 WebPage Regulatory News
    News

    European Council Adopts Position on Digital Finance Package Proposals

    The European Council adopted its position on two proposals that are part of the digital finance package adopted by the European Commission in September 2020, with one of the proposals involving the regulation on markets in crypto-assets (MiCA) and the other involving the Digital Operational Resilience Act (DORA).

    November 25, 2021 WebPage Regulatory News
    News

    PRA Proposes Rulebook Changes; BoE Extends BEEDS Testing Window

    The Prudential Regulation Authority (PRA) is proposing, via the consultation paper CP21/21, to apply group provisions in the Operational Resilience Part of the PRA Rulebook (relevant for the Capital Requirements Regulation or CRR firms) to holding companies.

    November 25, 2021 WebPage Regulatory News
    News

    FED Outlines Lending Conditions and Supervisory Activities in H1 2021

    The Board of Governors of the Federal Reserve System (FED) published a report that summarizes banking conditions in the United States, along with the supervisory and regulatory activities of FED.

    November 24, 2021 WebPage Regulatory News
    News

    EBA Publishes Standards to Calculate Risk-Weights of CIUs Under CRR

    The European Banking Authority (EBA) published the final report on draft regulatory technical standards for the calculation of risk-weighted exposure amounts of collective investment undertakings or CIUs, in line with the Capital Requirements Regulation (CRR).

    November 24, 2021 WebPage Regulatory News
    News

    APRA Expects Boards to Strengthen Ability to Oversee Cyber Resilience

    The Australian Prudential Regulation Authority (APRA) recently completed two pilot initiatives in its 2020-2024 Cyber Security Strategy, which was published in November 2020.

    November 23, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7736