APRA Consults on Definition of Significant Financial Institution
The Australian Prudential Regulation Authority (APRA) released a new set of frequently asked questions (FAQs) on APS 222, the prudential standard on associations with related entities. APRA also proposed minor amendments to centralize the definition of significant financial institution within the prudential framework, with the comment period open until May 02, 2022.
Under the proposed approach, all prudential standards would use the same definition of a significant financial institution. Centralizing this definition would not result in any changes to the quantitative criteria (asset thresholds) that have been used to determine the significant financial institutions in existing prudential standards, but it would lead to some small changes to the qualitative criteria. A significant financial institution means an APRA-regulated entity that is either
- not a foreign authorized deposit-taking institution, a Category C insurer or an EFLIC and has total assets in excess of AUD 20 billion in the case of an authorized deposit-taking institution; AUD 10 billion in the case of a general insurer or life company; AUD 3 billion in the case of a private health insurer; or AUD 30 billion in the case of a single register superannuation entity (RSE) operated by an RSE licensee, or if the RSE licensee operates more than one RSE where the combined total assets of all RSEs exceeds this amount; or
- determined as such by APRA, having regard to matters such as the complexity in its operations or its membership of a group.
This aligned definition would be located in the central definitions prudential standards for banking and insurance, as set out in Attachment A to the consultation letter. Prudential standards that differentiate requirements for significant and non-significant financial institutions would then be edited to reference this common definition. Amendments would be made to the Prudential Standards CPS 511 Remuneration, APS 110 Capital Adequacy, APS 112 Capital Adequacy: Standardized Approach to Credit Risk, and APS 115 Capital Adequacy: Standardized Measurement Approach to Operational Risk. APRA does not expect the proposed changes to qualitative criteria to materially alter the intended application of the significant financial institution regime. The main impact relates to foreign-owned authorized deposit-taking institutions. Following the finalization of the proposed amendments, APRA plans to make public the list of significant financial institutions for all industries.
Related Links
Keywords: Asia Pacific, Australia, Banking, APS 222, Reporting, APS 221, ARF 222, Significant Financial Institutions, Regulatory Capital, Basel, Proportionality, Related Party Transactions, APS 110, APS 112, APS 115, Securitization Framework, 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
SBV Publishes Multiple Regulatory Updates for BanksRelated Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
