AST APRA Regulator Priorities, Covid

On May 21, AST APRA spoke on adjustment to post-Covid world.

  • APRA Chair, Wayne Byres, spoke during FINSIA webinar on APRA’s response to Covid.
  • Strong Financial System
  • Australia entered 2020 with a financial sector in good financial health overall.
  • Major banks had strong balance sheets, liquidity and funding profiles, high capital, better asset quality, allowed banks to act as shock absorber for the economy.
  • Expectations
  • In Jan. 2020, APRA published policy and supervisory agenda for 2020, 8 weeks later announced most of it deferred until end Sep. 2020, many will not restart until 2021.
  • Also issued statement regarding the unquestionably strong capital benchmarks.
  • Relaxed benchmarks to ensure banks were well capitalized in the event of stress.
  • Wrote to banks and insurers in early Apr. 2020 asking that they seriously consider deferring, or materially reducing, discretionary capital distributions in months ahead.
  • Some chose to defer dividends, while those that paid have generally offset them with other capital raisings, APRA recognize important role they play in investment returns.
  • Mandate to protect bank deposits safety, ensure insurers have means to pay claims.
  • Loan Repayment Deferrals
  • APRA does not determine whether or how banks choose to offer customer support, but does have role in deciding the capital and reporting treatment of those loans.
  • APRA capital concessions to banks offering loan deferrals granted because, although some customers will not recover, banks in strong starting position to absorb losses.
  • Conclusion
  • Prudence is appropriate for now, APRA approach designed to underpin financial system stability over longer term and to help facilitate adjustments not excessively disruptive.

Regulators AST APRA
Entity Types B/D; Bank; Corp; SIFI
Reference PR, Sp, 5/21/2020; COVID-19
Functions BCS; Financial; Operations; Reporting; Risk; Trading; Treasury
Countries Australia
Products Banking; Loan; Repo/Reverse; Securities
Regions AP
Rule Type Guidance
Rule Date 5/21/2020
Effective Date 5/21/2020
Rule Id 78112
Linked to N/A
Reg. Last Update 5/21/2020
Report Section International

Last substantive update on 05/21/2020