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ARTICLE · 14 JUNE 2012

Basel III implementation in Australia: Refining regulatory capital criteria and reporting standards

Clayton Utz
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The proposed amendments may be of concern to ADIs that raise regulatory capital under offshore programmes.

AustraliaFinance and Banking
Louise McCoach
Louise McCoach
Eugene Bong
Eugene Bong
Andrew Jinks
Andrew Jinks
Joshua Knuckey
Joshua Knuckey
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On Friday 8 June 2012, the Australian Prudential Regulation Authority (APRA) released a letter to Australian Deposit-Taking Institutions (ADIs) proposing two amendments to the current draft of APS 111.

Proposal for Australian law to govern

APRA proposes to amend APS 111 to require all instruments to be subject to Australian law before they can qualify as Additional Tier 1 or Tier 2 Capital.

The reason given by APRA for this proposed amendment is to provide greater assurance that any conversion and/or write-off mechanism contained in regulatory capital instruments will be implemented with certainty and within a short timeframe.

The proposed amendment may be of concern to ADIs that raise regulatory capital under offshore programmes governed by foreign laws, particularly given that no transitional arrangements have been proposed by APRA.

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