APRA to Launch Climate Risk Survey, Review Basel Liquidity Reforms
The Australian Prudential Regulation Authority (APRA) revoked the authorized deposit-taking institution license of Members Equity Bank Limited (ME Bank), as the Bank of Queensland Limited acquired ME Bank in July 2021. APRA also released a cross-industry letter to advise on the purpose and timing of a voluntary climate risk self-assessment survey among medium-to-large regulated entities. Entities that choose to participate in the survey will have six weeks from receiving the questionnaire to provide their responses. Additionally, APRA published a discussion paper on the post-implementation review of the Basel III liquidity reforms. APRA is inviting feedback on the discussion paper by April 14, 2022.
The post-implementation review of liquidity reforms seeks to determine how efficiently and effectively the liquidity coverage ratio (LCR) and net stable funding ratio (NSFR) are achieving their objectives. APRA is seeking feedback from relevant stakeholders on benefits to financial safety and system stability, compliance costs (upfront and ongoing), commercial costs (such as impact on the cost of funding), and impact on competition. APRA intends to release a report on the outcomes of the post-implementation review by mid-2022. The outcomes of the review will be used to inform a broader review of the liquidity requirements and this review is scheduled for 2023. The post-implementation review will inform the scope of a planned review and update of the prudential standard on liquidity (APS 210) in 2023.
Coming back to the letter on climate risk self-assessment survey, APRA mentioned that the voluntary survey will gather insights on how APRA-regulated entities are managing climate-related financial risks, using the November 2021 prudential guide on climate change financial risks (CPG 229) as a benchmark. In addition to providing insights into the management of financial risks arising from climate change, the survey will help incorporate climate-related risks into the supervisory assessments of APRA. It will also improve comparability and benchmarking and practices within and across industry—and potentially internationally. Once the survey closes, APRA will provide participating entities with de-identified peer-comparison results to enable them to understand how their approaches and practices compare to peers as well as publish information on industry-level insights and themes from the results. APRA will also incorporate insights from the survey into its ongoing supervisory approaches to addressing the financial risks of climate change. APRA plans to consider the benefit of repeating the survey as well as the benefit of potentially expanding the survey to all regulated entities, to monitor how industry approaches to managing the financial risks of climate change are evolving over time.
- Press Release on ME Bank
- Press Release on Climate Risk Survey
- Letter on Climate Risk Survey
- Press Release on Liquidity Reforms
- Discussion Paper on Reforms (PDF)
Keywords: Asia Pacific, Australia, Banking, Bank Licenses, Climate Change Risk, ESG, Liquidity Risk, LCR, NSFR, Basel, APS 210, Climate Risk Survey, Liquidity Requirements, ME Bank, CPG 229, APRA
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Credit analytics expert helping clients understand, develop, and implement credit models for origination, monitoring, and regulatory reporting.
Hasan leads Moody’s Analytics ESG methodology development. He is expert on carbon transition, nature related risks and is a guest lecturer at ESSEC Business school on sustainable finance.
Previous ArticleMNB Welcomes Recommendations to Make Capital Markets Sustainable
ECB Finds Banks Unprepared for Pillar 3 Climate Risk Disclosures
The European Central Bank (ECB) published results of the 2022 supervisory assessment of climate-related and environmental risk disclosures among significant institutions (103) and a selected number of less significant institutions (28).
NCUA Assesses Credit Union Exposure to Climate-Related Physical Risks
The National Credit Union Administration (NCUA) released a Research Note that examines the exposure of credit unions to climate-related physical risks. In a related development
EBA Issues Multiple Regulatory and Reporting Updates for Banks
The European Banking Authority (EBA) is seeking comments, until July 31, 2023, on the draft Guidelines on the proposed common approach to the resubmission of historical data under the EBA reporting framework.
EC Adopts Regulation on Own Funds, Issues Other Updates
The European Commission adopted Delegated Regulations on own funds and eligible liabilities, on requirements for the internal methodology under the internal default risk model
CDP Platform to Report Plastic-Related Impact, Issues Other Updates
The Carbon Disclosure Project (CDP) announced that its global environmental disclosure platform has enabled reporting on plastic-related impact for nearly 7,000 companies worldwide
IASB to Enhance Reporting of Climate Risks, Proposes IFRS 9 Amendments
The International Accounting Standards Board (IASB) updated its work plan to enhance the reporting of climate-related risks in the financial statements,
BIS Addresses Data Gaps and Macro-Prudential Policy for Climate Risks
The Financial Stability Institute (FSI) of the Bank for International Settlements (BIS) published a brief paper that examines challenges associated with the use of macro-prudential policies to address climate-related financial risks.
FCA Sets Out Business Plan, Launches TechSprint on Greenwashing
The Financial Conduct Authority (FCA) published its business plan for 2023-24. The plan sets out details of the work planned for the next 12 months to achieve better outcomes for consumers and markets
UK Committee Sets Out Recommendations for Next Phase of Open Banking
The Joint Regulatory Oversight Committee (JROC), comprising the Financial Conduct Authority (FCA) and the Payment Systems Regulator (PSR) as co-chairs and the HM Treasury and the Competition and Markets Authority (CMA) as members
ECB Publishes Multiple Regulatory Updates for Banking Institutions
The European Central Bank (ECB) published the results of the 2022 climate risk stress test of the Eurosystem balance sheet,