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    APRA Issues Basel Disclosure Rule, Consults on Statistical Publication

    December 13, 2022

    The Australian Prudential Regulation Authority (APRA) published the final versions of the transitional as well as the new prudential standard on Basel Pillar 3 disclosures (APS 330), along with the non-confidential feedback and APRA's response to the consultation feedback for APS 330. Additionally, APRA is seeking comments, until January 31, 2023, on frequency of the proposed centralized statistical publication of key metrics. The centralized publication represents the first stage of the development of an entity-level publication of key prudential and financial data implementing the Pillar 3 requirements of Basel III and aims to facilitate comparison and analyses of data points by market participants. Both, APS 330 and the consultation on statistical publication, are applicable to the locally incorporated authorized deposit-taking institutions.

    As part of the finalized APS 330, APRA has released two versions the public disclosure standard—a transitional APS 330 and a new APS 330. The transitional APS 330 becomes effective from January 01, 2023 and is said to align with the authorized deposit-taking institution capital framework of APRA. The new APS 330 becomes effective from January 01, 2025 and aligns with both new capital framework of APRA and the internationally agreed minimum requirements for public disclosures set by the Basel Committee. APS 330 requires a locally incorporated authorized deposit-taking institution to meet minimum requirements for the public disclosure of key information on its capital, risk exposures, remuneration practices and, where applicable, its leverage ratio, liquidity coverage ratio, net stable funding ratio, and indicators for the identification of potential global systemically important banks. Post consultation, APRA modified the timing and format of the standard to ease implementation pressures and clarified other requirements. As part of the key changes, APRA has:

    • Delayed the effective date of the new APS 330 by twelve months to January 01, 2025. This longer timeframe will better support implementation by relieving pressure on resourcing as authorized deposit-taking institutions implement the new capital framework.
    • included provisions in both the new and transitional prudential standards that provide authorized deposit-taking institutions flexibility in meeting the international standards.
    • updated the transitional APS 330 so that authorized deposit-taking institutions may continue to make public disclosures from January 01, 2023 that are consistent with the new capital framework, until the new disclosure standard becomes effective on January 01, 2025.
    • updated Attachment A to the new APS 330 so that minimum international disclosure requirements better align with prudential framework of APRA.

    With respect to the consultation on the centralized statistical publication of key metrics, APRA has prioritized the publication of capital, liquidity ratios, and risk-weighted assets metrics over those proposed in the September 2021 letter. In the 20221 letter, APRA had advised that the publication of metrics was to be initially aligned with the current required disclosure frequency of authorized deposit-taking institutions and with the transition to a quarterly frequency over a two-year period. Most metrics to be included in the initial publication are already disclosed on a quarterly basis, however, these four metrics are currently disclosed less frequently: the Net Stable Funding Ratio (NSFR), the Minimum Liquidity Holding (MLH) ratio, and the traded market risk under Standard method and Internal model approach. APRA believes that publishing all the metrics quarterly would simplify the publication and improve comparability since not all disclosure dates are aligned. The first publication will be released in June 2023 for the March quarter 2023 reporting period and will include up to 10 years of historical data. Along with details of the publication, APRA also published a mock-up of the initial statistical publication. APRA intends to expand this publication over the coming years and will continue to consult with the authorized deposit-taking institution industry.

     

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    Keywords: Asia Pacific, Australia, Banking, Dislcosures, Basel, Regulatory Capital, Pillar 3, Reporting, APS 330, Liquidity Risk, APRA

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