CTHRepealedLegislation
Banking Act 1959 - Making of Prudential Standards: APS 110 - Capital Adequacy; APS 111 - Capital Adequacy: Measurement of Capital; APS 221 - Large Exposures; APS 222 - Associations with Related Entities (25/11/2002)
AGN 110.5 - Higher Minimum RatiosAGN 110.5 - Higher Minimum Ratios
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Turn the raw legal text into a practical explanation grounded in Banking Act 1959 - Making of Prudential Standards: APS 110 - Capital Adequacy; APS 111 - Capital Adequacy: Measurement of Capital; APS 221 - Large Exposures; APS 222 - Associations with Related Entities (25/11/2002).
AGN 110.5 - Higher Minimum Ratios
- In assessing an ADI’s overall capital adequacy at Level 1 and Level 2, APRA will take account of other risk factors that have not been incorporated or accounted for quantitatively in the risk-based capital adequacy framework to ensure that the minimum capital adequacy requirements for the ADI are broadly proportional to its overall risk profiles at Level 1 and Level 2. These factors include, for example, credit risk concentrations, profitability, liquidity[5], off-balance sheet exposures, concentration of particular types of assets or liabilities, operational risk and the effectiveness of the ADI’s management systems for monitoring and controlling risks.
- APRA will consider the above factors in deciding how much capital an ADI needs to hold above the minimum 8 per cent requirement at Level 1 and/or Level 2. All newly established ADIs are generally subject to a higher minimum risk-based capital ratio, both at Level 1 and Level 2, in their formative years.