APRA released aggregate results on the Committed Liquidity Facility (CLF) established between the Reserve Bank of Australia (RBA) and certain locally incorporated deposit-taking institutions that are subject to the liquidity coverage ratio (LCR). All locally incorporated LCR authorized deposit-taking institutions were invited to apply for a CLF amount, which is to take effect on January 01, 2020. All fifteen authorized deposit-taking institutions chose to apply. Following the assessment of applications by APRA, the aggregate net cash outflow of the fifteen institutions was estimated at approximately AUD 378 billion.
The total CLF amount allocated for 2020 (including an allowance for buffers over the minimum 100% requirement) is approximately AUD 23 billion. APRA and the RBA, in December 2010, had announced that authorized deposit-taking institutions subject to the LCR will be able to establish a CLF with the RBA. The CLF is intended to be sufficient in size to compensate for the lack of sufficient high-quality liquid assets, or HQLA, (mainly Australian government securities and securities issued by the borrowing authorities of the states and territories) in Australia for authorized deposit taking institutions to meet their LCR requirements. The authorized deposit-taking institutions are required to make every reasonable effort to manage their liquidity risk through their own balance sheet management before applying for a CLF for LCR purposes.
The CLF is required due to the low level of government debt in Australia. This limits the amount of high-quality liquid assets that financial institutions can reasonably hold as a buffer against periods of liquidity stress. Under the CLF, the Reserve Bank commits to providing a set amount of liquidity to institutions, subject to them satisfying several conditions. These include having paid a fee on the committed amount. So far, no financial institution has needed to draw on the CLF in response to a period of financial stress. The CLF has been in operation for five years and continues to be required, given the still relatively low level of government debt in Australia.
The LCR is part of the Basel III package of measures to strengthen the global banking system. The LCR is a minimum requirement that aims to ensure that authorized deposit-taking institutions maintain sufficient unencumbered high-quality liquid assets to survive a severe liquidity stress scenario lasting for 30 calendar days. APRA implemented the LCR on January 01, 2015.
Related Link: CLF Update (PDF)
Keywords: Asia Pacific, Australia, Banking, Committed Liquidity Facility, LCR, Basel III, HQLA, Liquidity Risk, APRA
APRA announced the standardization of quarterly reporting due dates for authorized deposit-taking institutions.
Bundesbank published a list of "EntryPoints" that are accepted in its reporting system; the list provides taxonomy version and name of the module against each EntryPoint.
The private sector working group of ECB on euro risk-free rates published the recommendations to address events that would trigger fallbacks in the Euro Interbank Offered Rate (EURIBOR)-related contracts, along with the €STR-based EURIBOR fallback rates (rates that could be used if a fallback is triggered).
EBA published the phase 1 of its reporting framework 3.1, with the technical package covering the new reporting requirements for investment firms (under the implementing technical standards on investment firms reporting).
Asia Pacific Australia Banking APS 111 Capital Adequacy Regulatory Capital Basel RBNZ APRA
ESMA published the final guidelines on outsourcing to cloud service providers.
EBA published annual data for two key concepts and indicators in the Deposit Guarantee Schemes (DGS) Directive—available financial means and covered deposits.
OSFI has set out the schedule for release of draft guidance on the management of technology risks by federally regulated financial institutions and private pension plans.
MAS updated rules for new housing loans by banks and finance companies.
HKMA published a statement on the 100% Personal Loan Guarantee Scheme and a guideline on the Green and Sustainable Finance Grant Scheme (GSF Grant Scheme) as announced in the 2021-22 Budget.