APRA published a response letter to submissions on the draft Reporting Standard ARS 220.0 on credit exposures and provisions. In response to the industry feedback, APRA is proposing a phased implementation of ARS 220.0. An interim and simplified reporting standard will apply while authorized deposit-taking institutions develop their solutions for delivering the full suite of credit risk data collected by ARS 220.0. The appendix to the response letter outlines the high-level timeframe for the collection of this information; this timeline is indicative and will change as APRA gains a better understanding of the complexities involved in the design of the new collection.
APRA is seeking to incorporate, into the final full reporting standards, data that support the updated credit risk capital framework requirements included in the prudential standard APS 112 on standardized approach to credit risk and the prudential standard APS 113 on internal ratings-based approach to credit risk. As part of the industry feedback to the October 2020 consultation, some authorized deposit-taking institutions indicated that they use pre-2006 versions of Australia and New Zealand Standard Industry Classification (ANZSIC) and indicated that they would need to re-work their systems to be able to report data by industry using ANZSIC 2006. APRA seeks feedback from authorized deposit-taking institutions on the impediments to transitioning to ANZSIC 2006 in time for full ARS 220.0 implementation in early 2023.
APRA is also consulting on the consequential changes to the authorized deposit-taking institution reporting standards and forms that will be affected by the revised Prudential Standard APS 220 on credit risk management. APRA proposes for these consequential changes to be effective from January 01, 2022. APRA is inviting comments on the proposed changes by July 06, 2021. Under the new APS 220, the term impaired will no longer be used and will be replaced with the term non-performing. At present,, eight authorized deposit-taking institution reporting standards and the reporting taxonomy of Reporting Form ARF 743.0 on housing finance use the term impaired and refer to the current APS 220 on credit quality. Consequently, APRA proposes to align these reporting standards and forms to the revised prudential standard by replacing the term impaired with the new term non-performing. The updated draft reporting standards include the following:
- ARS 112.1 on standardized credit risk on-balance sheet assets
- ARS 120.2 on securitization supplementary items
- ARS 199.0 on restricted and individual authorized deposit taking institution
- ARS 210.0 on liquidity
- ARS 220.0 on impaired facilities
- ARS 223.0 on residential mortgage lending
- ARS 230.0 on commercial property
- ARS 325.0 on international operations
Comment Due Date: July 06, 2021
Effective Date: January 01, 2022 (Proposed)
Keywords: Asia Pacific, Australia, Banking, Reporting, ARS 220, APS 220, Credit Risk, Regulatory Capital, Standardized Approach, Internal Ratings Based Approach, Residential Ratings Based Approach, APRA
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