Featured Product

    APRA Issues FAQs on New Credit Risk Management Standard

    March 10, 2022

    The Australian Prudential Regulation Authority (APRA) released a new set of frequently asked questions (FAQs) on the prudential standard on credit risk management (APS 220) for authorized deposit-taking institutions.

    APS 220—most requirements for which was slated to be enforced from January 01, 2022—applies to all activities of the authorized deposit-taking institutions that give rise to credit risk, except exposures that have been securitized, transferred, or originated into securitization vehicles that meet operational requirements for regulatory capital relief in the prudential standard on securitization (APS 120). The FAQs on credit risk management provide information to assist authorized deposit-taking institutions to interpret APS 220 and the associated reporting standards and include clarifications on the following key issues:

    • Following the removal of certain items from APS 220, APRA states that authorized deposit-taking institutions should continue to make Pillar 3 disclosures based on the current APS 330, using the terms as defined in APS 330: for example, "impaired" and "past due," as defined in Prudential Standard APS 220 Credit Quality (revoked APS 220). When APS 330 is next revised, APRA plans to make the appropriate changes to update these terms.
    • APRA intends to make changes to APRA reporting forms to reflect the removal of the requirement to hold a General Reserve for Credit Losses, or GRCL, in APS 220 when the relevant reporting forms are next updated. In this context, APRA clarified that provisions eligible to be included in tier 2 capital should continue to be reported under the General Reserve for Credit Losses item in APRA reporting forms.
    • APRA clarified that authorized deposit-taking institutions should not treat "Fully Secured" in ARS 742.0 as equivalent to "Well-Secured" in ARS 220.0. While there is a large overlap between the definitions of "Fully Secured" and "Well-Secured," there are also a number of differences that mean they are not exactly equivalent. 
    • The FAQs note APRA expects there will be an overlap between the reporting categories of "90 days past due, " "non-performing, " "stage 2"," and  "restructured " in ARS 220.0. APRA does not believe that these terms are mutually exclusive. APRA also understands that there may be some limited circumstances where overlap between "stage 2" and "restructured" may occur.  


    Related Links


    Keywords: Asia Pacific, Australia, Banking, Basel, Reporting, Regulatory Capital, Credit Risk, FAQ, Disclosures, ECL, APS 220, Pillar 3, APS 330, ARS 220, ARS 742, APRA

    Featured Experts
    Related Articles

    CFPB Finalizes Rule on Small Business Lending Data Collection

    The Consumer Financial Protection Bureau (CFPB) published a final rule that sets out data collection requirements on small business lending, under section 1071 of the Dodd-Frank Act.

    March 30, 2023 WebPage Regulatory News

    BCBS to Consult on Pillar 3 Climate Risk Disclosures by End of 2023

    The Bank for International Settlements (BIS) published a summary of the recent Basel Committee (BCBS) meetings.

    March 23, 2023 WebPage Regulatory News

    FINMA Approves Merger of Credit Suisse and UBS

    The Swiss Financial Market Supervisory Authority (FINMA) has approved the takeover of Credit Suisse by UBS.

    March 21, 2023 WebPage Regulatory News

    BOE Sets Out Its Thinking on Regulatory Capital and Climate Risks

    The Bank of England (BOE) published a working paper that aims to understand the climate-related disclosures of UK financial institutions.

    March 13, 2023 WebPage Regulatory News

    US Congress Report Examines Data Privacy and Cybersecurity Regulations

    The U.S. Congressional Research Service published a report on banking, data privacy, and cybersecurity regulation.

    March 13, 2023 WebPage Regulatory News

    OSFI Finalizes on Climate Risk Guideline, Issues Other Updates

    The Office of the Superintendent of Financial Institutions (OSFI) is seeking comments, until May 31, 2023, on the draft guideline on culture and behavior risk, with final guideline expected by the end of 2023.

    March 12, 2023 WebPage Regulatory News

    EU to Conduct One-Off Scenario Analysis to Assess Transition Risk

    The European authorities recently made multiple announcements that impact the banking sector.

    March 10, 2023 WebPage Regulatory News

    APRA Assesses Macro-Prudential Policy Settings, Issues Other Updates

    The Australian Prudential Regulation Authority (APRA) published an information paper that assesses its macro-prudential policy settings aimed at promoting stability at a systemic level.

    March 07, 2023 WebPage Regulatory News

    BIS Paper Examines Impact of Greenhouse Gas Emissions on Lending

    BIS issued a paper that investigates the effect of the greenhouse gas, or GHG, emissions of firms on bank loans using bank–firm matched data of Japanese listed firms from 2006 to 2018.

    March 03, 2023 WebPage Regulatory News

    HMT Mulls Alignment of Ring-Fencing and Resolution Regimes for Banks

    The HM Treasury (HMT) is seeking evidence, until May 07, 2023, on practicalities of aligning the ring-fencing and the banking resolution regimes for banks.

    March 02, 2023 WebPage Regulatory News
    RESULTS 1 - 10 OF 8810