APRA Submission on Proposed Legislation on Crisis Resolution Powers
APRA published its submission to the Senate Economics Legislation Committee's Inquiry into the Financial Sector Legislation Amendment (Crisis Resolution Powers and Other Measures) Bill 2017. The submission outlines key reforms in the proposed legislation. The proposed legislation is intended to ensure that the crisis management powers of APRA are fit-for-purpose, in the context of challenges that could emerge in the future.
The powers of APRA need to be able to be applied, in a proportionate manner, to the diverse population of financial institutions that APRA supervises. Although the proposed legislation draws on international standards for resolution regimes, these standards are adopted in a manner that is appropriate for the Australian financial system and consistent with the APRA mandate, including the core objective of protecting the interests of depositors and policyholders. APRA is focused on improving the crisis preparedness of its regulated industries in coming years, through developing its framework for recovery and resolution planning. The proposed legislation will help facilitate this and will provide APRA with a clear mandate to set formal prudential requirements for resolution planning and, where necessary, to require an institution to take preparatory measures to address barriers to its resolution, during normal times. The reforms are intended to:
- Enhance statutory and judicial management regimes of APRA to ensure their effective operation in a crisis
- Enhance the scope and efficacy of existing directions powers of APRA and improve its ability to implement a transfer under the Financial Sector (Business Transfer and Group Restructure) Act 1999 (Transfer Act)
- Ensure the effective conversion and write-off of capital instruments, in accordance with the prudential standards
- Enhance stay provisions to ensure that the exercise of APRA’s powers against one entity in a group does not trigger adverse rights under contracts of other relevant entities in the same group
- Enhance ability of APRA to respond when an Australian branch of a foreign regulated entity may be in distress
- Enhance the efficiency and operation of the Financial Claims Scheme and ensure that it supports the crisis resolution framework
- Enhance and simplify powers of APRA in relation to the wind-up or external administration of regulated institutions, and other related matters
- Ensure that APRA has clear powers to make appropriate prudential standards on resolution planning and to require institutions to take measures to improve their preparedness for resolution, where appropriate
Related Link: APRA Submission (PDF)
Keywords: Asia Pacific, Australia, Banking, Recovery and Resolution Framework, Crisis Management Framework, APRA
Featured Experts
Blake Coules
Across 35 years in banking, Blake has gained deep insights into the inner working of this sector. Over the last two decades, Blake has been an Operating Committee member, leading teams and executing strategies in Credit and Enterprise Risk as well as Line of Business. His focus over this time has been primarily Commercial/Corporate with particular emphasis on CRE. Blake has spent most of his career with large and mid-size banks. Blake joined Moody’s Analytics in 2021 after leading the transformation of the credit approval and reporting process at a $25 billion bank.
Previous Article
EBA Consults on Requirements for Home-Host Cooperation Under PSD2Related Articles
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.
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.
BIS Bulletin Examines Cognitive Limits of Large Language Models
The use cases of generative AI in the banking sector are evolving fast, with many institutions adopting the technology to enhance customer service and operational efficiency.
ECB is Conducting First Cyber Risk Stress Test for Banks
As part of the increasing regulatory focus on operational resilience, cyber risk stress testing is also becoming a crucial aspect of ensuring bank resilience in the face of cyber threats.
EBA Continues Momentum Toward Strengthening Prudential Rules for Banks
A few years down the road from the last global financial crisis, regulators are still issuing rules and monitoring banks to ensure that they comply with the regulations.
EU and UK Agencies Issue Updates on Final Basel III Rules
The European Commission (EC) recently issued an update informing that the European Council and the Parliament have endorsed the Banking Package implementing the final elements of Basel III standards