Guidelines on Authorisation of ADIs (PDF 53 Kb)

The Australian Prudential Regulation Authority (APRA) today released Guidelines for local and foreign financial entities wishing to operate in Australia as an Authorised Deposit-Taking Institution (ADI). The Guidelines, which set out the minimum criteria to be addressed in applications, are intended to assist applicants seeking an authority to carry on "banking business" (consisting of both taking deposits and making advances) in Australia under the Banking Act 1959 ("the Act"). Applicants should familiarise themselves with the Act and the Financial Sector (Shareholdings) Act 1998, and, if necessary, seek legal advice regarding their application.

Applicants should note, in particular, Section 66 of the Act which prohibits the use of certain words and expressions, including the word "bank", in relation to financial businesses without APRA consent (refer Section 66 Guidelines on APRAs website). Such consent is not inherent in an authority to carry on banking business. Applicants wishing to use the restricted words should submit a separate application for consent, concurrently with the application for an authority to carry on banking business.

APRA will only authorise suitable applicants with the capacity and commitment to conduct banking business with integrity, prudence and competence on a continuing basis. Utmost importance is placed on the fitness and propriety of the board and management of an applicant. There must be sufficient start-up capital, as well as a commitment to provide additional capital, to support the scale and complexity of the business proposed. Applicants must undertake to submit to APRAs supervision and meet existing Prudential Standards at all times.

The Guidelines are consistent with existing Prudential Statements J1 and J2, which will be replaced.

While the Guidelines lay down the minimum information and documentation required in an application, it is in the interest of prospective applicants to discuss their plans with APRA in advance of making a formal application. These informal discussions can minimise misunderstandings and focus attention on any obstacles at an early stage.

Prospective applicants should also have regard to the incorporation and corporate governance requirements administered by the Australian Securities & Investments Commission (ASIC) under the Corporations Law (see ASICs website at www.asic.gov.au).

For further information contact:

Gloria Peterson
02 9210 3385