APRA Finalizes Reporting Standards for Updated Basel Capital Framework
The Australian Prudential Regulation Authority (APRA) finalized the reporting standards to support the updated capital adequacy and credit risk capital requirements for authorized deposit-taking institutions. Also published were the non-confidential responses to the consultation on reporting standards and the draft taxonomy artefacts on capital adequacy for reporting standard ARS 112.0 on standardized approach to credit risk and ARS 113.0 on internal ratings-based approach to credit risk.
The final reporting standards will accompany the new bank capital framework, which is designed to embed unquestionably strong levels of capital and align Australian standards with the internationally agreed Basel III requirements. The final reporting standards include ARS 110.0 on capital adequacy, ARS 112.0 on standardized approach to credit risk, ARS 113.0 on internal ratings-based approach to credit risk, ARS 180.0 on counterparty credit risk, ARS 221.0 on large exposures, and ARS 223.0 on residential mortgage lending. APRA has made changes to these new collections to better meet data needs, simplify reporting requirements, and reduce the need for future data collections and ad hoc requests. Below are the highlights of the APRA letter on response to the consultation feedback:
- APRA is committed to meeting the January 01, 2023 implementation date to complete the prudential reforms and provide institutions with certainty for planning. To maximize the time available for entities development of reporting solutions, APRA is including a copy of the publicly visible taxonomy (PVT) with this response and will be making the collection available in the APRA Connect external test environment in early September. APRA will also hold information sessions to provide more information regarding the submission of returns.
- APRA made changes to ARS 112.0 and ARS 113.0. to clarify that reporting is expected at Level 1 and Level 2 and that exposures in New Zealand subsidiaries are not to be included.
- APRA made minor amendments to ARS 110.0 to better capture the quantum of exposures in New Zealand subsidiaries.
- A number of submissions had requested further information regarding the continuing requirement to report under the reporting standard ARS 118.1 (Other Off-balance Sheet Exposures), given that the content overlaps with that of the new ARS 112.0 and ARS 113.0. APRA can confirm that ARS 118.1 will be discontinued as part of the ARS 112.0 implementation.
- APRA clarified that it expects the first reporting for ARS 115.0 to be submitted 35 calendar days after March 31, 2023 and made minor modifications to ARS 113 to improve the ability to use data provided under this standard when comparing standardized and Internal Ratings-based Approach credit risk.
Another recent update from APRA involves publication of the frequently asked questions (FAQs) on Economic and Financial Statistics (EFS). The FAQs provide timely guidance on commonly asked questions about reporting and are designed to clarify reporting issues raised by authorized deposit-taking institutions and registered financial corporations.
Related Links
Keywords: Asia Pacific, Australia, Banking, Basel, Regulatory Capital, Credit Risk, Standardized Approach, IRB Approach, ARS 112, ARS 113, ARS 110, Large Exposures, Lending, Residential Mortgage, Reporting, 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
ESMA Proposes Improvements to Third Country Benchmarks RegimeRelated Articles
ISSB Sustainability Standards Expected to Become Global Baseline
The finalization of the two sustainability disclosure standards—IFRS S1 and IFRS S2—is expected to be a significant step forward in the harmonization of sustainability disclosures worldwide.
IOSCO, BIS, and FSB to Intensify Focus on Decentralized Finance
Decentralized finance (DeFi) is expected to increase in prominence, finding traction in use cases such as lending, trading, and investing, without the intermediation of traditional financial institutions.
BCBS Assesses NSFR and Large Exposures Rules in US
The Basel Committee on Banking Supervision (BCBS) published reports that assessed the overall implementation of the net stable funding ratio (NSFR) and the large exposures rules in the U.S.
Global Agencies Focus on ESG Data, Climate Litigation and Nature Risks
At the global level, supervisory efforts are increasingly focused on addressing climate risks via better quality data and innovative use of technologies such as generative artificial intelligence (AI) and blockchain.
ISSB Standards Shine Spotlight on Comparability of ESG Disclosures
The finalization of the IFRS sustainability disclosure standards in late June 2023 has brought to the forefront the themes of the harmonization of sustainability disclosures
EBA Issues Several Regulatory and Reporting Updates for Banks
The European Banking Authority (EBA) recently issued several regulatory publications impacting the banking sector.
BCBS Proposes to Revise Core Principles for Banking Supervision
The Basel Committee on Banking Supervision (BCBS) launched a consultation on revisions to the core principles for effective banking supervision, with the comment period ending on October 06, 2023.
US Proposes Final Basel Rules, Transition Period to Start in July 2025
The U.S. banking agencies (FDIC, FED, and OCC) recently proposed rules implementing the final Basel III reforms, also known as the Basel III Endgame.
FSB Report Outlines Next Steps for Climate Risk Roadmap
The Financial Stability Board (FSB) recently published the second annual progress report on the July 2021 roadmap to address climate-related financial risks.
EBA Plans on Ad-hoc ESG Data Collection and Climate Scenario Exercise
The recognition of climate change as a systemic risk to the global economy has further intensified regulatory and supervisory focus on monitoring of the environmental, social, and governance (ESG) risks.
