The Australian Prudential Regulation Authority (APRA) today released a paper that sets out its response to submissions on its proposals on securitisation. These proposals updated APRA’s existing prudential framework for securitisation to incorporate the new Basel capital adequacy regime, known as the Basel II Framework, as well as market developments.
APRA’s response paper is accompanied by a final draft Prudential Standard APS 120 Securitisation that incorporates a number of amendments suggested in the consultation process.
The final draft prudential standard sets out the general requirements applying to the involvement of an authorised deposit-taking institution (ADI) in securitisation activities, as well as the methodology for the calculation of an ADI’s credit risk regulatory capital requirement for securitisation exposures.
APRA Chairman Dr John Laker said that the revisions had been guided by the general principle that a securitisation should stand clearly separate from an ADI.
“At the same time, APRA does not wish to unduly disrupt existing market practices and it is proposing to step back from its current approach of prior approval of new securitisation structures”, he said.
The proposals form part of the Basel II capital adequacy regime for ADIs that will come into force on 1 January 2008. The full suite of Basel II prudential standards is expected to be finalised in late 2007.
Comments on the response paper and the final draft Prudential Standard APS 120 Securitisation are invited by 10 August 2007 and can be emailed to basel2@apra.gov.au.
The documents are available on APRA’s website at www.apra.gov.au/ADI/Basel-II-implementation-in-Australia.cfm.
The Australian Prudential Regulation Authority (APRA) is the prudential regulator of the financial services industry. It oversees banks, credit unions, building societies, general insurance and reinsurance companies, life insurance, friendly societies, and most members of the superannuation industry. APRA is funded largely by the industries that it supervises. It was established on 1 July 1998. APRA currently supervises institutions holding approximately $2.5 trillion in assets for 20 million Australian depositors, policyholders and superannuation fund members.
Media and industry inquiries only:
Stuart Snell, Head of Public Affairs
Australian Prudential Regulation Authority
Telephone: 02 9210 3384
Mobile: 0407 250 276
All other inquiries:
APRA Contact Centre 1300 131 060
