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9 September 2020

Treatment of loans impacted by COVID-19

On 9 September 2020, APRA released a response to its consultation on formalising the capital measures and reporting requirements for loans impacted by COVID-19. The final Prudential Standard APS 220 Credit Quality, final Reporting Standard ARS 923.2 Repayment Deferrals and four non-confidential submissions received in response to the consultation, are available.

September 2020

On 9 September 2020, APRA released a response to its consultation on formalising the capital measures and reporting requirements for loans impacted by COVID-19. APRA’s response to submissions, the final Prudential Standard APS 220 Credit Quality and final Reporting Standard ARS 923.2 Repayment Deferrals are available below. APRA received four non-confidential submissions in response to its consultation, which are also available below:

Letter 

Letter to authorised deposit-taking institutions: Response to submissions – treatment of loans impacted by COVID-19

Prudential standard

Final Prudential Standard APS 220 Credit Quality - Clean - September 2020

Issued September 2020

Reporting standard

Final Reporting Standard ARS 923.2 Repayment Deferrals - September 2020

Non-confidential submissions

August 2020

On 13 August 2020, APRA commenced consultation on the formalisation of the capital measures and reporting requirements for loans impacted by COVID-19 through temporary legislative instruments.

To help facilitate authorised deposit-taking institutions (ADIs) supporting their customers through the COVID-19 period, APRA announced in March 2020 a temporary capital treatment for a period of up to six months for loans where the ADI had granted a repayment deferral. On 9 July 2020, APRA published a letter which extended the temporary capital treatment and also adjusted the treatment of restructured loans affected by COVID-19.  As foreshadowed in that letter, this consultation formalised the announced capital measures and reporting requirements through temporary legislative instruments.

APRA gave effect to the temporary capital treatment by adding a new Attachment E to Prudential Standard APS 220 Credit Quality (APS 220). The new Attachment E operates on a time-limited basis, and modifies the application of APS 220 requirements for loans affected by COVID-19.

APRA is also collecting and publishing entity-level data on COVID-19 impacted loans through a new Reporting Standard ARS 923.2 Repayment Deferrals (ARS 923.2).

APRA invited feedback on the draft Attachment E to APS 220 as well as the draft ARS 923.2 and its approach to publishing entity level data.

Submissions were received until 21 August 2020.

The consultation letter and draft reporting standard can be found below:

Letter 

Letter to authorised deposit-taking institutions: Consultation on the treatment of loans impacted by COVID-19 - the letter includes the draft Attachment E to APS 220 Credit Quality

Reporting standard

Published 13 August 2020

Note on submissions

It is APRA's policy to publish all submissions on the APRA website unless the respondent specifically tells APRA in writing that all or part of the submission is to remain confidential. An automatically generated confidentiality statement in an email does not satisfy this purpose. If you would like only part of your submission to be confidential, you should provide this information marked as 'confidential' in a separate attachment.