Banking (prudential standard) determination No. 4 of 2007 - Prudential Standard APS 111 - Capital Adequacy: Measurement of Capital
IFRS transition arrangementsIFRS transition arrangements
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IFRS transition arrangements
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For the purposes of this Prudential Standard, transitional relief may be granted by APRA, in writing, to an ADI up to 1 January 2010 where its dollar amount of innovative capital instruments exceeds the 15 per cent limit at 1 January 2008. An ADI may include an excess amount agreed by APRA as eligible Innovative Tier 1 capital during the transition period. In determining the excess amount for transition, APRA will limit the amount to the difference between the dollar amount of the ADI’s Innovative Tier 1 capital instruments as at 31 August 2005 and the dollar amount of Innovative Tier 1 capital that the ADI would otherwise be entitled to hold had the 15 per cent limit applied to the ADI’s Tier 1 capital as at 1 July 2006. The actual excess amount for transition will be agreed with APRA, in writing, based on the ADI’s estimated capital base as at 1 January 2008 and any other factors, including other capital management measures undertaken by the ADI.
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Any unrealised gains resulting from the first-time adoption of the “cost model” for owner-occupied property must be included at full value in Upper Tier 2 capital, subject to regular impairment testing.