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 110.6 - Reductions in CapitalAGN 110.6 - Reductions in Capital
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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 110.6 - Reductions in Capital
- For the purpose of paragraph 10 of the Standard, a reduction in an ADI’s capital (whether at Level 1, 2 or 3) includes share buyback; redemption, repurchase or repayment of any qualifying Tier 1 and Tier 2 capital instruments issued by the ADI or by other entities included in the calculation of the ADI’s Level 2 or 3 capital adequacy; trading in the ADI’s own shares or capital instruments (refer paragraph 4 of AGN 111.4 – Capital Deductions); or where the ADI’s total servicing obligations on Tier 1 capital instruments exceed its after-tax earnings in the financial year to which they relate (refer paragraph 5 of APS 111 – Capital Adequacy: Measurement of Capital).
- An ADI proposing a capital reduction (whether at Level 1, 2 or 3) should provide APRA with a relevant capital plan covering the respective level(s). The plan should extend for at least 2 years.
- To obtain APRA’s approval for any proposed reduction in its capital (whether at Level 1, 2 or 3), an ADI will need to satisfy APRA that the ADI’s capital (at Level 1, 2 or 3 as appropriate) after the proposed reduction will remain adequate for its future needs.