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
Related Articles
EBA Proposes Standards for IRRBB Reporting Under Basel Framework
The European Banking Authority (EBA) proposed implementing technical standards on the interest rate risk in the banking book (IRRBB) reporting requirements, with the comment period ending on May 02, 2023.
FED Issues Further Details on Pilot Climate Scenario Analysis Exercise
The U.S. Federal Reserve Board (FED) set out details of the pilot climate scenario analysis exercise to be conducted among the six largest U.S. bank holding companies.
US Agencies Issue Several Regulatory and Reporting Updates
The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.
ECB Issues Multiple Reports and Regulatory Updates for Banks
The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.
HKMA Keeps List of D-SIBs Unchanged, Makes Other Announcements
The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.
EU Issues FAQs on Taxonomy Regulation, Rules Under CRD, FICOD and SFDR
The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.
CBIRC Revises Measures on Corporate Governance Supervision
The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.
HKMA Publications Address Sustainability Issues in Financial Sector
The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.
EBA Updates Address Basel and NPL Requirements for Banks
The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.
ESMA Publishes 2022 ESEF XBRL Taxonomy and Conformance Suite
The General Board of the European Systemic Risk Board (ESRB), at its December meeting, issued an updated risk assessment via the quarterly risk dashboard and held discussions on key policy priorities to address the systemic risks in the European Union.
