APRA Licenses Two More Banks, Reduces Committed Liquidity Facility
The Australian Prudential Regulation Authority (APRA) updated the list of authorized deposit-taking institutions, granting license to Barclays Bank PLC and Crédit Agricole Corporate and Investment Bank to operate as foreign authorized deposit-taking institutions under the Banking Act 1959. APRA also updated the lists of the Direct to APRA validation and derivation rules for authorized deposit-taking institutions, insurers, and superannuation entities. At present, all reporting entities, including the regulated and registered financial entities, submit data to APRA via the D2A. Additionally, APRA issued a letter to the authorized deposit-taking institutions announcing a reduction in the aggregate Committed Liquidity Facility from AUD 140 billion on September 10, 2021 to AUD 102 billion on January 01, 2022.
This announcement on Committed Liquidity Facility follows the September 2021 communication, according to which APRA expects institutions subject to the Liquidity Coverage Ratio (LCR) requirements to reduce their reliance on the Committed Liquidity Facility to zero by the end of 2022, subject to financial market conditions. In the September announcement, APRA also advised that the Committed Liquidity Facility allocation of an authorized deposit-taking institution would decrease to zero through equal reductions on January 01, 2022; April 30, 2022; August 31, 2022; and December 31, 2022 and that an institution may choose to reduce this Facility early if it considers itself of have sufficient surplus funding and liquidity. APRA expects to provide a further update on the size of the aggregate Committed Liquidity Facility in May 2022, following the second scheduled reduction.
The LCR is a minimum requirement that aims to ensure that authorized deposit-taking institutions maintain sufficient unencumbered high-quality liquid assets (HQLA) to survive a severe liquidity stress scenario lasting for 30 calendar days. The Committed Liquidity Facility, which was established with the Reserve Bank of Australia (RBA) in 2015, is intended to be sufficient in size to compensate for the lack of sufficient HQLA, which in Australia consists of notes and coins, Exchange Settlement Account balances held with the RBA, Australian Government Securities (AGS), and semi-government securities. APRA expects institutions to purchase the HQLA necessary to eliminate the need for the Committed Liquidity Facility. Specifically, no authorized deposit-taking institution should rely on the Committed Liquidity Facility to meet its minimum 100% LCR requirement from the beginning of 2022 (although institutions may continue to count any remaining Committed Liquidity Facility as part of their liquidity buffer).
Related Links
- Press Release on License to Barclays Bank
- Press Release on License to Crédit Agricole
- Register of Authorized Deposit-Taking Institutions
- Updated Validation and Derivation Rules
- Press Release on Liquidity Facility
- Letter on Liquidity Facility
- Liquidity Facility Update, September 2021
Keywords: Asia Pacific, Australia, Banking, Bank Licenses, Committed Liquidity Facility, LCR, Liquidity Risk, Barclays, Crédit Agricole, Banking Act, Reporting, Validation Rules, Derivation Rules, APRA
Previous Article
ESAs Publish List of Financial Conglomerates for 2021Related Articles
OSFI Issues Phase2 Consultation on Climate Scenario Exercise for Banks
The Office of the Superintendent of Financial Institutions (OSFI) recently announced a consultation on the second phase of the Standardized Climate Scenario Exercise (SCSE) for banks and other financial institutions it regulates in Canada.
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.
