Federal Register of Legislation
Banking (prudential standard) determination No. 1 of 2024
Prudential Standard APS 112 Capital Adequacy: Standardised Approach to Credit Risk
Banking Act 1959 I, Clare Gibney, a delegate of APRA:
(a) under subsection 11AF(3) of the Banking Act 1959 (the Act), REVOKE Banking (prudential standard) determination No. 6 of 2022, including Prudential Standard APS 112 Capital Adequacy: Standardised Approach to Credit Risk made under that determination; and
(b) under subsection 11AF(1) of the Act, DETERMINE Prudential Standard APS 112 Capital Adequacy: Standardised Approach to Credit Risk in the form set out in the schedule, which applies to all ADIs and authorised NOHCs to the extent provided in paragraphs 2 to 4 of the prudential standard.
This instrument commences on 30 September 2024.
Dated: 27 August 2024
Clare Gibney Executive Director Policy & Advice Division
Interpretation In this instrument:
APRA means the Australian Prudential Regulation Authority.
ADI, authorised NOHC and prudential standard have their respective meanings given in subsection 5(1) of the Act.
Schedule
Prudential Standard APS 112 Capital Adequacy: Standardised Approach to Credit Risk comprises the document commencing on the following page.
Prudential Standard APS 112
Capital Adequacy: Standardised Approach to Credit Risk Objectives and key requirements of this Prudential Standard This Prudential Standard requires an authorised deposit-taking institution to hold sufficient regulatory capital against its credit risk exposures. The key requirements of this Prudential Standard are that an authorised deposit-taking institution: * must apply risk weights to its on- and off-balance sheet exposures for capital adequacy purposes. Risk weights are broadly aligned with the likelihood of counterparty default; and * may reduce the credit risk capital requirement for its on- and off-balance sheet exposures where the exposure is covered by eligible lenders' mortgage insurance, or an eligible credit risk mitigation technique.
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