The Australian Prudential Regulation Authority (APRA) today released for industry comment three draft prudential standards on Capital Adequacy for all Authorised Deposit-taking Institutions (ADIs).
When finalised these standards will replace the Prudential Statement on Capital Adequacy for Banks (PS C1), and the FI Scheme Prudential Standard and Practice & Interpretative Notes for Capital Adequacy for building societies and credit unions.
The first draft standard - Capital Adequacy - explains the underlying capital adequacy requirement represented by the capital ratio. The second draft standard - Capital Adequacy: Capital - covers the various allowable forms of capital which make up the numerator of the capital ratio, while the third draft standard, Capital Adequacy: Credit Risk explains the determination of risk weighted assets, the denominator of the capital ratio.
The draft standards are broadly consistent with the existing - PS C1 (banking) and FI Scheme - requirements. All ADIs will be deemed compliant when the new standards first come into effect. Where ADIs have to adjust to meet their requirements fully, transition periods will be allowed.
The draft standards and accompanying guidance notes, as well as PS C1 and the FI Scheme Prudential Standard and Practice & Interpretative Notes, are available on the APRA website, www.apra.gov.au.
Comments are invited on the proposed standards and guidance notes by 30 May 2000, and may be addressed to:
Mr Brian Gray
Executive General Manager
Policy, Research and Consulting
Australian Prudential Regulation Authority
GPO Box 9836
Sydney NSW 2001
Alternatively email ADIstandards.capitaladequacy@apra.gov.au
