APRA releases consultation package on disclosure of composition of capital and remuneration

The Australian Prudential Regulation Authority (APRA) today released a consultation paper and draft prudential standard relating to Pillar 3 disclosures on the composition of capital and on remuneration by authorised deposit-taking institutions (ADIs) in Australia.

As part of the Basel III capital reforms released by the Basel Committee on Banking Supervision in December 2010, ADIs will be required to disclose additional information on their capital adequacy and capital instruments. These disclosure requirements will, among other things, inform the market of the composition of ADIs’ regulatory capital in a standard form that will allow market participants to compare the capital positions of banking institutions in different jurisdictions.

ADIs will be required to publish a reconciliation between their regulatory capital and financial statements. They will also need to disclose full details of the terms and conditions of each regulatory capital instrument and a summary of those instruments in a standard form.

In addition, APRA will be consulting on its proposed implementation of the Basel Committee’s requirements for ADIs to disclose qualitative and quantitative information about their remuneration practices and aggregate remuneration data for senior managers and material risk-takers. APRA had foreshadowed these requirements, which take account of the Financial Stability Board’s Principles for Sound Compensation Practices (2009), in a letter to ADIs in October 2011.

APRA is proposing that the requirements commence for the first reporting period on or after 30 June 2013.

The package released today can be found on the APRA website.