Featured Product

    APRA Announces Stronger Capital Benchmarks for Banks

    July 19, 2017

    APRA announced its assessment on the additional capital required for the Australian banking sector to have capital ratios that are considered “unquestionably strong.” APRA released an Information Paper that outlines its conclusions on the quantum and timing of capital increases that will be required for Australian authorized deposit-taking institutions to achieve unquestionably strong capital ratios. All authorized deposit-taking institutions are expected to meet the new benchmarks by January 01, 2020.

    The analysis draws on international comparisons as well as other information that allows capital strength to be viewed from different perspectives. In its assessment, APRA has focused on the appropriate calibration of common equity tier 1 (CET1) capital requirements, recognizing that CET1 is the highest quality capital and, therefore, most likely to engender confidence in an authorized deposit-taking institution’s financial strength. APRA has distinguished between the authorized deposit-taking institutions using the more conservative standardized approach to capital adequacy and the banks that are accredited to use internal models to determine their capital requirements. The four major Australian banks need to have CET1 capital ratios of at least 10.5% to meet the “unquestionably strong” benchmark. APRA will set prudential standards to achieve this outcome by effectively increasing requirements for all internal ratings-based banks by the equivalent of nearly 150 basis points. For other authorized deposit-taking institutions, the effective increase in capital requirements to meet the “unquestionably strong” benchmark will be about 50 basis points.

     

    The 2014 Financial System Inquiry (FSI) endorsed the benefits of a strong and well-capitalized banking system and recommended that APRA set capital standards such that capital ratios of authorized deposit-taking institutions are unquestionably strong. The Australian government subsequently endorsed this recommendation.

     

    Related Link: Media Release

    Keywords: Asia Pacific, Australia, Banking, CET1, Basel III, Internal Ratings Based, Standardized Approach, APRA

    Featured Experts
    Related Articles
    News

    APRA Publishes Submission on Fintech and Regtech

    APRA published its submission, to the Senate Select Committee, on financial technology and regulatory technology.

    January 21, 2020 WebPage Regulatory News
    News

    ECB Consults on Guideline on Threshold for Credit Obligations Past Due

    ECB published a draft guideline, along with the frequently asked questions (FAQs), on the definition of the materiality threshold for credit obligations past due for less significant institutions.

    January 20, 2020 WebPage Regulatory News
    News

    BIS Discusses Role of Central Banks in Addressing Climate Change Risks

    BIS published a book that reviews ways of addressing the climate change risks within the financial stability mandate of central banks.

    January 19, 2020 WebPage Regulatory News
    News

    FSB Report Examines Global Nonbank Financial Intermediation Activity

    FSB published the ninth annual report examining the global non-bank financial intermediation activity.

    January 19, 2020 WebPage Regulatory News
    News

    OSFI Publishes Instruction Guide on Solvency Information Return

    OSFI published an instruction guide to assist administrators of pension plans in completing the Solvency Information Return that is required to be filed with OSFI.

    January 17, 2020 WebPage Regulatory News
    News

    EU Amends IFRS 9 Rule, Changes Concern Interest Rate Benchmark Reforms

    EU published Regulation 2020/34 regarding the International Accounting Standard (IAS) 39 and International Financial Reporting Standards (IFRS) 7 and 9.

    January 16, 2020 WebPage Regulatory News
    News

    FDIC and OCC Issue Statement on Heightened Cyber Security Risk

    In response to the heightened cyber-security risk facing the financial services industry and other critical business sectors, FDIC and OCC issued an interagency statement on heightened cyber-security risk.

    January 16, 2020 WebPage Regulatory News
    News

    BCRA Updates Regulation on Capital Requirements and Information Regime

    BCRA updated the rules on minimum capital requirements for financial entities and on certain aspects of the information transparency regime for quarterly and annual supervision.

    January 16, 2020 WebPage Regulatory News
    News

    BoE and FCA Outline Next Steps for LIBOR Transition in 2020

    BoE, FCA, and the Working Group on Sterling Risk-Free Reference Rates (RFRWG) have published a set of documents that outline the LIBOR transition priorities and milestones for 2020.

    January 16, 2020 WebPage Regulatory News
    News

    BIS to Expand Central Bank Membership

    BIS is to expand its central bank membership base and to increase collaboration in its work as a forum for international cooperation and as a hub for central banks and other financial authorities.

    January 14, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 4511