Attachment BAttachment B

Attachment B

Minimum liquidity holdings approach

1. For the purpose of this Attachment, liabilities are defined as total on-balance sheet liabilities and irrevocable commitments, except where approved for a prudential purpose by APRA.

2. For the purpose of the MLH requirement, liquid assets are included at market value. These assets must be free from encumbrances except where approved for a prudential purpose by APRA, and include:

3. notes and coin and settlement funds;

4. Commonwealth Government and semi-government securities;

5. debt securities guaranteed by the Australian Government, or foreign sovereign governments;

6. debt securities issued by supranationals and foreign governments;

7. bank bills, certificates of deposits (CDs) and debt securities issued by ADIs;

8. deposits (at call and any other deposits readily convertible into cash within two business days) held with other ADIs net of placements by other ADIs; and

9. any other securities approved by APRA.

10. All debt securities must be eligible for repurchase agreement with the RBA and must not be subordinated.

11. An MLH ADI must ensure it has the operational capacity to liquidate any securities held as liquid assets within two business days.

12. In order to ensure that the MLH requirement is not breached, absent a situation of financial stress, an ADI must set a trigger ratio above its MLH requirement and must ensure that it manages its liquidity in accordance with its trigger ratio.

13. An ADI must inform APRA immediately when it becomes aware that its liquid assets may fall below its MLH requirement and advise APRA of the remedial action taken or planned to restore its liquidity position above its MLH requirement.