In a letter addressed to the industry, the Australian Prudential Regulation Authority (APRA) set out an updated schedule of policy priorities for the banking, insurance, and superannuation industries. APRA had published the annual update on the prudential policy agenda in February 2021 and is now setting out the reprioritized policy agenda in this interim update, in response to the industry feedback on specific policy consultations and in light of the ongoing COVID-19 pandemic. Annex A to the APRA letter summarizes the policy priorities for the fourth quarter of 2021 and those that have been deferred to 2022. The next full update on policy agenda for 2022-2023 is scheduled for early next year.
The following are they key policy priorities outlined by APRA in this communication:
- Completion of the bank capital reforms, with three final standards for capital adequacy to be released in November 2021 and to apply from January 2023. These standards are APS 110 on overall approach to capital requirements, APS 112 on standardized approach to credit risk, and APS 113 on internal ratings-based approach to credit risk. APRA also intends to finalize Prudential Standard APS 220 on credit risk management in the fourth quarter of 2021.
- Finalization of the prudential standard on the Interest Rate Risk in the Banking Book (APS 117), which is now expected in 2022, with the standard expected to effective in 2024.
- Release of the final prudential practice guidance on managing the financial risks of climate change and an information paper setting out framework for the use of macro-prudential policy tools in the fourth quarter of 2021.
- Consultation of the standards on governance (CPS 510) and on remuneration disclosure requirements (CPS 511) in 2022, with the CPS 510 expected to be effective in 2024 and CPS 511 in 2023.
- Consultation on new standards for financial contingency planning and resolution, to be released in November 2021 (for an extended consultation).
- Consultation on disclosure requirements (APS 330) to be launched in 2022 (instead of the in the fourth quarter of 2021), with final standard expected to be effective in 2024.
Keywords: Asia Pacific, Australia, Banking, Policy Priorities 2021, Basel, Operational Risk, Credit Risk, ESG, Climate Change Risk, Regulatory Capital, Interest Rate Risk, Disclosures, Stress Testing, IRRBB, APRA
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