APRA Consults on Reporting Standard for Credit Risk Management
APRA is consulting on the reporting standard for credit risk management (ARS 220.0). APRA is seeking feedback on the design of the proposed credit risk data collection, including items that authorized deposit-taking institutions consider to be challenging to report or would require additional time to implement. APRA is consulting on the instructions included in the draft reporting standard, the proposed implementation timeline, and appropriate entity-level aggregates from ARS 220.0 data, which could be declared non-confidential. APRA also seeks feedback on the feasibility of authorized deposit-taking institutions reporting a pro-rata allocation to individual financial instruments of provisions that have been raised on a portfolio basis. The feedback period ends on January 28, 2021 while the proposed standard is expected to commence on January 01, 2022.
APRA intends to remove a number of items from the current reporting forms, including detail on interest income and certain breakdowns of impaired and past due items. APRA proposes to remove the requirement for authorized deposit-taking institutions to categorize their prescribed provisioning exposures into separate time buckets. APRA acknowledges that collecting provisions allocated on a portfolio basis at a detailed level, as is proposed in the draft reporting standard, introduces complexity into the collection. Accordingly, APRA is seeking industry feedback on ways that provisions could be reported at a financial instrument level, for example, on a pro-rata basis.
APRA is proposing a risk-based approach to reporting based on the complexity of the authorized deposit-taking institution wherein less sophisticated authorized deposit-taking institutions have reduced reporting requirements. The proportionate approach seeks to balance burden with the supervisor requirements. APRA seeks further feedback on potential enhancements to this approach. The data collected by ARS 220.0 will form the basis of an authorized deposit-taking institution financial instrument data model, which will be extended at a future date to include topics such as capital adequacy for credit risk, among other areas of interest. In keeping with the APRA approach to data, the ARS 220.0 data model uses a financial instrument level concept-dimension model. Compared with the existing collection, the draft ARS 220.0 will collect more detailed data on credit exposures and provisions of authorized deposit-taking institutions.
APRA proposed to update ARS 220.0 to align it with the final version of prudential standard on credit risk management (APS 220) released in December 2019. To align with the commencement of the new APS 220, APRA proposes the first reporting period for the new data collection to be for quarter ending March 31, 2022. The proposed implementation of ARS 220.0 will coincide with the start of the new data collection solution APRA Connect. APRA intends to consult further on determining ARS 220.0 data to be non-confidential for the purposes of section 56 of the APRA Act at a later date. In the interim, APRA is seeking feedback on how appropriate aggregations could address industry concerns with a view to including them as part of the upcoming consultation. Once finalized, the draft ARS 220.0 is intended to replace the current reporting standards on impaired facilities (ARS 220.0), on prescribed provisioning (ARS 220.3), and on movements in provisions for impairment (ARS 220.5).
Related Links
Comment Due Date: January 28, 2021
Effective Date: January 01, 2022
Keywords: Asia Pacific, Australia, Banking, Credit Risk, Proportionality, Regulatory Capital, Reporting, ARS 220, APS 220, Basel, APRA
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Patrycja Oleksza
Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area
Previous Article
MAS Launches Scheme to Support Green and Sustainability-Linked LoansRelated Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
