Featured Product

    APRA Finalizes Credit Risk Management Standard and Associated Changes

    June 14, 2022

    The Australian Prudential Regulation Authority (APRA) finalized amendments its macro-prudential policy framework, along with the associated revisions to the prudential standard on credit risk management (APS 220). It also decided to update its Quarterly Authorized Deposit-taking Institution Performance (QADIP) and Quarterly Authorized Deposit-taking Institution Property Exposures (QPEX) statistical publications. APRA also published its response to the proposed changes to the quarterly statistical publications, along with the mock-up tables with updated explanatory notes and the updated QADIP and QPEX glossaries.

    The new macro-prudential policy framework has been given effect through new requirements on authorized deposit-taking institutions set out in an attachment (Attachment C) to the prudential standard for credit risk management (APS 220). The Attachment C includes a set of credit-based macroprudential measures that APRA could use, if needed, to address risks to financial stability. The Attachment applies to credit exposures in Australia where the majority of the collateral value securing the loan is located in Australia, or for unsecured loans where the ultimate risk of the exposure is located in Australia. Banks will need to have systems in place to limit growth in higher risk residential mortgage lending, such as loans at high debt-to-income multiples or high loan-to-valuation ratios. APRA may require institutions to publicly disclose the level of lending against any limits specified by APRA, for the period in which the limits apply. Institutions will be required to meet the new requirements from September 01, 2022. To ensure appropriate alignment with the final Attachment C to APS 220, APRA is also making corresponding amendments to relevant guidance and reporting standards:

    • APRA updated prudential practice guide on residential mortgage lending (APG 223) to align with new requirements for a prudent setting of the serviceability buffer.
    • APRA updated cross-references across relevant reporting standards, including reporting standard on residential mortgage lending (ARS 223).

    Changes to Quarterly Statistical Publications were proposed in February 2022, with the aim to accommodate the new APS 220, notably to continue the publication of data regarding non-performing loans. APRA received two submissions: one confidential submission from an authorized deposit-taking institution and one non-confidential submission from the Australian Banking Association (ABA submission). The ABA advocated for postponing the first publication until later this year, giving the authorized deposit-taking institutions sufficient time to identify and correct any underlying data issues in the new reporting form. However, APRA intends to release the quarterly statistical publications on schedule, as no significant data issues have been identified in the first quarterly submissions and the data on asset quality is key to monitoring the health of the banking system. In the given situation, APRA views the risk of delaying the publication of key data series as greater than the risk of potential data quality concerns. Thus, APRA will proceed with the proposed updates to QADIP and QPEX, with the updated statistical publications slated to be first released on June 14, 2022, for the March 2022 reference period.


    Related Links


    Keywords: Asia Pacific, Australia, Banking, Credit Risk, APS 220, Lending, Reporting, ARS 223, Macro-Prudential Policy, RRE, QADIP, QPEX, Statistical Reporting, APRA

    Featured Experts
    Related Articles

    EBA Finalizes Templates for One-Off Climate Risk Scenario Analysis

    The European Banking Authority (EBA) has published the final templates, and the associated guidance, for collecting climate-related data for the one-off Fit-for-55 climate risk scenario analysis.

    November 28, 2023 WebPage Regulatory News

    EBA Mulls Inclusion of Environmental & Social Risks to Pillar 1 Rules

    The European Banking Authority (EBA) recently published a report that recommends enhancements to the Pillar 1 framework, under the prudential rules, to capture environmental and social risks.

    October 31, 2023 WebPage Regulatory News

    BCBS Consults on Disclosure of Crypto-Asset Exposures of Banks

    As a follow on from its prudential standard on the treatment of crypto-asset exposures, the Basel Committee on Banking Supervision (BCBS) proposed disclosure requirements for crypto-asset exposures of banks.

    October 19, 2023 WebPage Regulatory News

    BCBS and EBA Publish Results of Basel III Monitoring Exercise

    The Basel Committee on Banking Supervision (BCBS) and the European Banking Authority (EBA) have published results of the Basel III monitoring exercise.

    October 18, 2023 WebPage Regulatory News

    PRA Updates Timeline for Final Basel III Rules, Issues Other Updates

    The Prudential Regulation Authority (PRA) recently issued a few regulatory updates for banks, with the updated Basel implementation timelines being the key among them.

    October 18, 2023 WebPage Regulatory News

    US Treasury Sets Out Principles for Net-Zero Financing

    The U.S. Department of the Treasury has recently set out the principles for net-zero financing and investment.

    October 17, 2023 WebPage Regulatory News

    EC Launches Survey on G7 Principles on Generative AI

    The European Commission (EC) launched a stakeholder survey on the draft International Guiding Principles for organizations developing advanced artificial intelligence (AI) systems.

    October 14, 2023 WebPage Regulatory News

    ISSB Sustainability Standards Expected to Become Global Baseline

    The finalization of the two sustainability disclosure standards—IFRS S1 and IFRS S2—is expected to be a significant step forward in the harmonization of sustainability disclosures worldwide.

    September 18, 2023 WebPage Regulatory News

    IOSCO, BIS, and FSB to Intensify Focus on Decentralized Finance

    Decentralized finance (DeFi) is expected to increase in prominence, finding traction in use cases such as lending, trading, and investing, without the intermediation of traditional financial institutions.

    September 18, 2023 WebPage Regulatory News

    BCBS Assesses NSFR and Large Exposures Rules in US

    The Basel Committee on Banking Supervision (BCBS) published reports that assessed the overall implementation of the net stable funding ratio (NSFR) and the large exposures rules in the U.S.

    September 14, 2023 WebPage Regulatory News
    RESULTS 1 - 10 OF 8938