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APRA: Capital Framework Revisions Draft Guidance

14 March 2022

The ABA continues to support a revised capital framework that strengthens the financial resilience of the industry, embeds the industry’s unquestionably strong level of capital and provides for greater flexibility in periods of stress. ABA member banks are actively working towards the implementation of APRA’s revised capital framework. Considerable work still remains in both defining and implementing the framework based on the practice guides issued as well as implementing related changes to regulatory reporting, modifications to Pillar 3 and international comparability studies, and updates to related standards.

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Bank Capital Reforms: Update

20 August 2021

We support a revised capital framework that strengthens the financial resilience of the industry, embeds unquestionably strong levels of capital and also provides for greater flexibility in periods of stress. We recommend that APRA: • replace the parallel run with targeted quantitative impact surveys (QIS) • delay the implementation of the standardised approach for foundation and advanced internal ratings based (FIRB and AIRB) authorised deposit-taking institutions (ADIs) • reduce the regulatory reporting burden on ADIs for March 2023, and • delay the implementation of new Pillar 3 changes to 2024.

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APRA: A more flexible and resilient capital framework for ADIs

1 April 2021

The ABA recommends that the final policy settings accurately reflect the proven resilience of banks and the needs of the Australian economy. The ABA also expects further calibration to be undertaken to ensure there is no increase to the overall level of capital in the banking system, considers that the proposed application of a non-standard treatment to interest-only mortgages with terms greater than five years is unduly punitive, considers that the proposed capital allocation to New Zealand exposures at Level 2 is set at a conservative level that is not commensurate with the level of risk ABA members also feel consideration should be given to increasing the default level of the proposed CCyB, it considers that the required IT updates makes the 1 January 2023 commencement date challenging, encourages APRA to promptly update its 2015 International capital comparison study and some of APRA’s current proposals may amplify volatility without necessarily improving the measurement of risk.

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