Banking (prudential standard) determination No. 3 of 2007 - Prudential Standard APS 110 - Capital Adequacy
Higher Prudential Capital Ratios (PCRs)Higher Prudential Capital Ratios (PCRs)
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Higher Prudential Capital Ratios (PCRs)
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In assessing an ADI’s overall capital adequacy, APRA may take into account other risk factors that have not been incorporated or accounted for in the risk-based capital adequacy framework, to ensure that the minimum capital adequacy requirements for the ADI are consistent with its overall risk profile. These factors include, for example, credit risk concentrations, profitability, liquidity, concentration of particular types of assets or liabilities and the effectiveness of the ADI’s management systems for monitoring and controlling risks.
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APRA may consider other factors, including the capital adequacy of subsidiaries of the ADI and any group headed by a holding company of an ADI, in deciding an ADI’s PCR and the required minimum levels and composition of the ADI’s Tier 1 capital and capital base. Newly established ADIs will generally be subject to a higher PCR in their formative years.