Featured Product

    APRA Consults on Improvements to Capital Framework for Deposit Takers

    August 14, 2018

    APRA published a discussion paper that outlines the potential approaches to adjust the capital framework for authorized deposit-taking institutions to make capital ratios more transparent, comparable, and flexible. These approaches focus on amending disclosure requirements and the way in which institutions would be required to calculate and report capital ratios, without altering the quantum and risk-sensitivity of capital requirements. Written submissions must be sent by November 02, 2018.

    The approaches would not change the amount of capital authorized deposit-taking institutions are required to hold beyond the unquestionably strong capital benchmarks announced in July 2017. Rather, APRA is considering whether to alter the way authorized deposit-taking institutions’ capital requirements are calculated and disclosed to facilitate greater domestic and international comparability and transparency of capital strength. The discussion paper outlines two general approaches designed to aid authorized deposit-taking institutions in representing and communicating their capital strength:

    • Under the first approach, authorized deposit-taking institutions would continue using existing definitions of capital and risk-weighted assets, but APRA would develop a methodology allowing them to improve the credibility and robustness of internationally comparable capital ratio disclosures
    • Under a second approach, APRA would change the way authorized deposit-taking institutions calculate capital ratios to instead use more internationally harmonized definitions of capital and risk-weighted assets. To maintain the strength and risk-sensitivity of the capital framework, there would need to be corresponding increases in minimum ratio and/or capital buffer requirements.

    The discussion paper also proposes measures to make the capital framework more flexible in times of stress, including by increasing the size of regulatory capital buffers relative to minimum regulatory capital requirements. APRA is open to considering these approaches independently or in combination, or indeed retaining its current methodology, and is seeking industry feedback on whether the benefits of the suggested approaches outweigh the regulatory burden and associated increase in complexity. APRA intends to consult on draft revised prudential standards incorporating the outcome of this consultation in 2019. APRA expects that final prudential standards would be released by mid-2020. In finalizing the revised capital framework, APRA will have regard to the Basel III implementation timetable. However, as indicated in the February 2018 Discussion Paper, it is likely that the revised prudential requirements would commence from January 01, 2021

     

    Related Links

    Comment Due Date: November 02, 2018

    Keywords: Asia Pacific, Banking, Capital Framework, Basel III, Regulatory Capital, Disclosures, APRA

    Featured Experts
    Related Articles
    News

    APRA Revises Standard on Margin Rules for Uncleared Derivatives

    APRA revised CPS 226, which is the prudential standard on margin and risk mitigation requirements for non-centrally cleared derivatives.

    September 19, 2019 WebPage Regulatory News
    News

    PRA Issues Consultation on Prudent Person Principle Under Solvency II

    PRA, via the consultation paper CP22/19, has set out its proposed expectations for investment by firms, in accordance with the Prudent Person Principle (PPP).

    September 18, 2019 WebPage Regulatory News
    News

    EIOPA Forms Consultative Expert Group on Digital Ethics in Insurance

    EIOPA established the Consultative Expert Group on Digital Ethics in Insurance to assist EIOPA in the development of digital responsibility principles in insurance.

    September 17, 2019 WebPage Regulatory News
    News

    FDIC Approves Proposal to Amend Swap Margin Rule

    FDIC approved what would be a joint proposal by the US Agencies (FCA, FDIC, FED, FHFA, and OCC) to amend regulations that require swap dealers and security-based swap dealers under the agencies’ respective jurisdictions to exchange margin with their counterparties for swaps that are not centrally cleared (Swap Margin Rule).

    September 17, 2019 WebPage Regulatory News
    News

    FASB Proposes Taxonomy Changes Related to Topics 848 and 470

    FASB proposed taxonomy improvements for the proposed Accounting Standards Update on topic 848 on facilitation of effects of reference rate reform on financial reporting.

    September 16, 2019 WebPage Regulatory News
    News

    BoE Statement on Recalculating Transitional Measures Under Solvency II

    BoE notified that it will be willing to accept applications from firms to recalculate transitional measure on technical provisions (TMTP) as at September 30, 2019.

    September 16, 2019 WebPage Regulatory News
    News

    BIS Hosts Conference to Discuss Issues from Emergence of Stablecoins

    BIS hosted a conference in Basel to discuss policy and regulatory issues posed by the emergence of stablecoin initiatives backed by financial institutions and large technology companies.

    September 16, 2019 WebPage Regulatory News
    News

    BIS Paper on Embedded Supervision of Blockchain-Based Financial Market

    BIS published a working paper that investigates ways to regulate and supervise blockchain-based financial markets.

    September 16, 2019 WebPage Regulatory News
    News

    BoE Paper on Market-Implied Systemic Risk and Shadow Capital Adequacy

    BoE published a working paper that presents a forward-looking approach to measure systemic solvency risk.

    September 13, 2019 WebPage Regulatory News
    News

    HKMA Consults on Policy Module on Pillar 2 Supervisory Review Process

    HKMA is consulting on the revised Supervisory Policy Manual module CA-G-5 that sets out the HKMA approach to conducting the supervisory review process under Pillar 2.

    September 13, 2019 WebPage Regulatory News
    RESULTS 1 - 10 OF 3830