The Australian Prudential Regulation Authority (APRA) released its response to the consultations on the confidentiality of data submitted to APRA by authorized deposit-taking institutions. In a letter to the industry, APRA announced its decision to make key entity-level financial metrics non-confidential in a new centralized publication from 2022. The letter responds to the consultations on the confidentiality of data used in the quarterly publications of authorized deposit-taking institutions and additional historical data. The letter also outlines an updated timeline for revisions to APS 330, the prudential standard on public disclosures. APS 330 sets out requirements for institutions to undertake periodic disclosure of information on their capital adequacy, capital instrument, remuneration practices, and other indicators of financial condition and risk profile to contribute to the transparency of financial markets and to enhance market discipline.
Foreign authorized deposit-taking institution branches are excluded from APS 330 requirements and will not be included in the publication. The new publication is planned for release for the first quarter reporting period of 2022. The publication will include the full history of all published metrics submitted by the authorized deposit-taking institution. APRA will work with authorized deposit-taking institutions and industry associations to reconcile definitional issues prior to publication, with a view to disclosing meaningful comparable information across the industry, particularly for balance sheet data. A draft template of the new publication will be released after further liaison with industry associations. The key authorized deposit-taking institution metrics publication represents the first stage of the development of a centralized authorized deposit-taking institution entity-level publication of key prudential and financial data implementing Basel’s Pillar 3 requirements.
For locally incorporated authorized deposit-taking institutions, APRA intends to publish key prudential and financial metrics aligned with Pillar 3 requirements and other disclosures listed in the Attachment 1 to this letter, initially at the current required disclosure frequency of the authorized deposit-taking institutions. The proposed key metrics publication will improve data quality and increase the transparency of the authorized deposit-taking institution data APRA collects, providing the following benefits:
- Informing the public. Providing entity-level key capital, liquidity, and asset quality data will enable industry, government, investors and beneficiaries and the general public to more effectively assess the risk of Australian-incorporated authorized deposit-taking institutions. The authorized deposit-taking institution financial performance and balance sheet data will also be available, which is in line with the content of APRA’s insurance and superannuation entity-level publications and will move Australia closer toward international best practice.
- Influencing by comparison. The release of centralized key prudential and financial metrics data publication will promote better practices through comparability and peer review, facilitating analysis and understanding of observed trends and maintaining confidence in the Australian financial system.
- Driving accountability. Sharing of key prudential and financial metrics will encourage authorized deposit-taking institutions to act with self-discipline and encourage better, more efficient market behavior.
APRA also announced that it will delay revisions to APS 330 by twelve months, for better alignment with the policy development timeline for the authorized deposit-taking institutions capital reforms. The revised APS 330 timeline means that consultation will occur in 2022, the final standard will be released in late 2022, and the effective date will be January 01, 2024. This timeline will alleviate pressures on authorized deposit-taking institutions for simultaneously implementing multiple revised standards into their operations. To further alleviate pressures on small, less complex authorized deposit-taking institutions, APRA is retaining the carve-out of eligible authorized deposit-taking institutions on the simplified capital framework from APS 330 requirements from January 01, 2023. APRA’s centralized publication on key authorized deposit-taking institution prudential metrics will be operational from the first quarter of 2023, to ensure transparency of key prudential and financial authorized deposit-taking institutions metrics. Revisions to APS 330 for other authorized deposit-taking institutions will apply from January 01. 2024, with the current APS 330 continuing to apply until this date.
Keywords: Asia Pacific, Australia, Banking, Disclosures, Basel, Pillar 3, APS 330, Regulatory Capital, Remuneration, APRA
Previous ArticleUS Agencies Issue Guide to Evaluate Relationships with Fintech Firms
The Office of the Superintendent of Financial Institutions (OSFI) published an update on the discussion paper that intended to engage federally regulated financial institutions and other interested stakeholders in a dialog with OSFI, to proactively enhance and align assurance expectations over key regulatory returns.
The European Commission (EC) published a report summarizing responses to the targeted consultation on the supervisory convergence and the single rulebook in the European Union (EU).
The European Central Bank (ECB) published its opinion on a proposal for a regulation on European green bonds, following a request from the European Parliament.
The Advisory Scientific Committee (ASC) of the European Systemic Risk Board (ESRB) published a report that explores the expected impact of digitalization on provision of financial and banking services, and proposes policy measures to address the risks stemming from digitalization.
The Hong Kong Monetary Authority (HKMA) is consulting on the draft Financial Institutions (Resolution) Ordinance (Cap. 628), or FIRO, Code of Practice chapter on liquidity and funding in resolution, until March 14, 2022.
The Swedish Financial Supervisory Authority (FI) announced that the capital adequacy reporting as at December 31, 2021 must be done by February 11, 2022.
The European Banking Authority (EBA) announced that the guidelines on the reporting and disclosure of exposures subject to measures COVID-relief measures shall continue to apply until further notice.
The Central Bank of the Philippines (BSP) issued communications covering developments related to online lending platforms, open finance framework and roadmap, and on the expected regulations in the area sustainable finance.
The Board of Governors of the Federal Reserve System (FED) published the final rule that amends Regulation I to reduce the quarterly reporting burden for member banks by automating the application process for adjusting their subscriptions to the Federal Reserve Bank capital stock, except in the context of mergers.
The European Banking Authority (EBA) published its assessment of risks through the quarterly Risk Dashboard and the results of the Autumn edition of the Risk Assessment Questionnaire (RAQ).