General Information & Client Service
  • Americas: +1.212.553.1653
  • Asia: +852.3551.3077
  • China: +86.10.6319.6580
  • EMEA: +44.20.7772.5454
  • Japan: +81.3.5408.4100
Media Relations
  • New York: +1.212.553.0376
  • London: +44.20.7772.5456
  • Hong Kong: +852.3758.1350
  • Tokyo: +813.5408.4110
  • Sydney: +61.2.9270.8141
  • Mexico City: +001.888.779.5833
  • Buenos Aires: +0800.666.3506
  • São Paulo: +0800.891.2518
March 25, 2019

APRA is proposing to update its prudential standard on credit risk management requirements for authorized deposit-taking institutions. To this end, APRA released a discussion paper proposing changes to the Prudential Standard APS 220 Credit Quality (APS 220), which requires authorized deposit-taking institutions to control credit risk by adopting prudent credit risk management policies and procedures. APRA is proposing to rename APS 220 as Prudential Standard APS 220 Credit Risk Management (the revised APS 220) to better describe the purpose of the revised standard. APRA intends to implement the proposed reforms to APS 220 from July 01, 2020.

The discussion paper outlines the proposals of APRA in the following areas:

  • Credit risk management—The revised APS 220 broadens coverage to include credit standards and the ongoing monitoring and management of an authorized deposit-taking institution’s credit portfolio in more detail. It also incorporates enhanced Board oversight of credit risk and the need for authorized deposit-taking institutions to maintain prudent credit risk practices over the credit life-cycle.
  • Credit standards—The revised APS 220 incorporates outcomes from APRA's recent supervisory focus on credit standards and addresses recommendations from the Final Report of the Royal Commission in relation to the valuation of land taken as collateral by the authorized deposit-taking institutions.
  • Asset classification and provisioning—The revised APS 220 provides a more consistent classification of credit exposures, by aligning recent accounting standard changes on loan provisioning requirements (under AASB 9), as well as other guidance on credit-related matters of BCBS.

Since 2006, when APS 220 was substantially updated, credit risk practices have significantly evolved, with the emergence of more sophisticated analytical techniques and information systems. Consequently, APRA is planning to modernize the standard. An accompanying prudential practice guide and revised reporting standards will be released for consultation later in 2019. APRA expects that the final prudential standard, prudential practice guide, and reporting standards will be released by the end of 2019.

 

Related Links

Effective Date: July 01, 2020 (Proposed)

Keywords: Asia Pacific, Australia, Banking, Credit Risk Management, APS 220, Credit Risk, AASB 9, IFRS 9, APRA

Related Articles
News

HKMA Decides to Maintain Countercyclical Capital Buffer at 2.5%

HKMA announced that, in accordance with the Banking (Capital) Rules, the countercyclical capital buffer (CCyB) ratio for Hong Kong remains at 2.5%.

April 16, 2019 WebPage Regulatory News
News

EP Approves Agreement on Package of CRD 5, CRR 2, BRRD 2, and SRMR 2

The European Parliament (EP) approved the final agreement on a package of reforms proposed by EC to strengthen the resilience and resolvability of European banks.

April 16, 2019 WebPage Regulatory News
News

FDIC Consults on Approach to Resolution Planning for IDIs

FDIC approved an Advance Notice of Proposed Rulemaking (ANPR) and is seeking comment on ways to tailor and improve its rule requiring certain insured depository institutions (IDIs) to submit resolution plans.

April 16, 2019 WebPage Regulatory News
News

EP Resolution on Proposal for Sovereign Bond Backed Securities

The European Parliament (EP) published adopted text on the proposal for a regulation of the European Parliament and of the Council on sovereign bond-backed securities (SBBS).

April 16, 2019 WebPage Regulatory News
News

PRA Seeks Input and Issues Specifications for Insurance Stress Tests

PRA announced that it will conduct an insurance stress test for the largest regulated life and general insurers from July to September 2019.

April 15, 2019 WebPage Regulatory News
News

PRA Finalizes Policy on Approach to Managing Climate Change Risks

PRA published the policy statement PS11/19, which contains final supervisory statement (SS3/19) on enhancing banks’ and insurers’ approaches to managing the financial risks from climate change (Appendix).

April 15, 2019 WebPage Regulatory News
News

EBA Single Rulebook Q&A: First Update for April 2019

EBA published answers to nine questions under the Single Rulebook question and answer (Q&A) updates for this week.

April 12, 2019 WebPage Regulatory News
News

EIOPA Statement on Application of Proportionality in SCR Supervision

EIOPA published a supervisory statement on the application of proportionality principle in the supervision of the Solvency Capital Requirement (SCR) calculated in accordance with the standard formula.

April 11, 2019 WebPage Regulatory News
News

FED Updates Form and Supplemental Instructions for FR Y-9C Reporting

FED updated the form and supplemental instructions for FR Y-9C reporting. FR Y-9C is used to collect data from domestic bank holding companies, savings and loan holding companies, U.S intermediate holding companies, and securities holding companies with total consolidated assets of USD 3 billion or more.

April 11, 2019 WebPage Regulatory News
News

OSFI Finalizes Guidelines on Liquidity Adequacy and NSFR Disclosures

OSFI published the final Liquidity Adequacy Requirements (LAR) guideline and the net stable funding ratio (NSFR) disclosure requirements guideline.

April 11, 2019 WebPage Regulatory News
RESULTS 1 - 10 OF 2920