Reporting Standard ARS 110.0 (2005)
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Commonwealth legislation
This Act has been repealed and is no longer in force. It is retained for historical reference.
Requires all locally‑incorporated authorised deposit‑taking institutions (ADIs) to report capital‑adequacy information to APRA each reporting period using Form ARF 110.0; highest parents must also submit consolidated‑group returns. Submissions may be electronic or paper, must meet specified due dates, and are subject to external‑auditor review and internal authorisation (paras 1–5, 8–13).
APRA can vary reporting frequency and make minor form changes; boards, senior management and external auditors bear the compliance burden (paras 7, 10–15).
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Direct links to the current provisions in Financial Sector (Collection of Data) determination No. 65 of 2005 - Reporting Standard ARS 110.0 (2005) - Capital Adequacy.
This reporting standard is made under section 13 of the Financial Sector (Collection of Data) Act 2001 (the Collection of Data Act). It requires all authorised deposit-taking institutions (ADIs) that are locally-incorporated to report to APRA, generally on a quarterly basis, in relation to their capital adequacy.
This reporting standard outlines the overall requirements for the provision of relevant information to APRA. It should be read in conjunction with:
Purpose
Application and commencement
A locally-incorporated ADI must provide APRA with the information required by the version of Form ARF 110.0 designated for a ‘Licensed ADI’ for each reporting period.
A locally-incorporated ADI that is a highest parent entity in relation to a consolidated ADI group must also provide APRA with the information required by the version of Form ARF 110.0 designated for a ‘Consolidated Group’ for each reporting period.
(a) in electronic form, using one of the electronic submission mechanisms provided by the ‘Direct to APRA’ (also known as ‘D2A’) application; or
(b) manually completed on paper, which must be faxed or mailed to APRA’s head office.
Note: the Direct to APRA application software and paper forms may be obtained from APRA.
Subject to paragraph 7, a locally-incorporated ADI must provide the information required by this reporting standard for each quarter based on the financial year (within the meaning of the Corporations Act 2001) of the ADI.
APRA may, by notice in writing, change the reporting periods, or specified reporting periods, for a particular ADI, to require it to provide the information required by this reporting standard more frequently, or less frequently, having regard to:
(a) the particular circumstances of the ADI;
(b) the extent to which the information is required for the purposes of the prudential supervision of the ADI; and
(c) the requirements of the Reserve Bank of Australia or the Australian Bureau of Statistics.
(a) in the case of information required by paragraphs 3 and 4 from a locally-incorporated bank or locally-incorporated special service provider – 20 business days after the end of the reporting period to which the information relates; and
(b) in the case of information required by paragraphs 3 and 4 from a locally incorporated credit union, locally-incorporated building society, locally-incorporated specialist credit card institution or Cairns Penny Savings & Loans Limited – 15 business days after the end of the reporting period to which the information relates.
The information provided by an ADI under this reporting standard (except for the information required under paragraph 4) must be the product of processes and controls that have been reviewed and tested by the external auditor of the ADI. AGS 1008 ‘Audit Implications of Prudential Reporting Requirements for Authorised Deposit-taking Institutions’, issued by the Auditing and Assurances Standards Board of the Australian Accounting Research Foundation, provides guidance on the scope and nature of the review and testing required from external auditors. This review and testing must be done on an annual basis or more frequently if necessary to enable the external auditor to form an opinion on the accuracy and reliability of the data.
All information provided by an ADI under this reporting standard must be subject to processes and controls developed by the ADI for the internal review and authorisation of that information. It is the responsibility of the board and senior management of the ADI to ensure that an appropriate set of policies and procedures for the authorisation of data submitted to APRA is in place.
If an ADI submits information under this reporting standard using the ‘Direct to APRA’ software, it will be necessary for an officer of the ADI to digitally sign, authorise and encrypt the relevant data. For this purpose, APRA’s certificate authority will issue ‘digital certificates’, for use with the software, to officers of the ADI who have authority from the ADI to transmit the data to APRA.
If information under this reporting standard is provided in paper form, it must be signed on the front page of the relevant completed form by either:
(a) the Principal Executive Officer of the ADI; or
(b) the Chief Financial Officer of the ADI (whatever his or her official title may be).
(a) a form that is part of this reporting standard, and the instructions to such a form, to correct technical, programming or logical errors, inconsistencies or anomalies; or
(b) the instructions to a form, to clarify their application to the form
without changing any substantive requirement in the form or instructions.
Transitional
16.17.In this reporting standard:
Accounting Standard AASB 1024 means the accounting standard so designated made by the Australian Accounting Standards Board, being the accounting standard that applied in respect of reporting periods (within the meaning of the accounting standard) commencing immediately before 1 January 2005.
ADI means an authorised deposit-taking institution within the meaning of the Banking Act 1959.
ADI list means the attached ADI list.
building society means an ADI whose name appears under the heading ‘Building Societies’ in the ADI list.
consolidated ADI group means a group comprising:
(a) an ADI that is a highest parent entity; and
(b) each subsidiary (within the meaning of Accounting Standard AASB 1024) of that ADI, whether the subsidiary is locally-incorporated or not, other than a subsidiary that is excluded by the instructions attached to this standard.
credit union means an ADI whose name appears under the heading ‘Credit Unions’ in the ADI list.
highest parent entity means an ADI that satisfies all of the following conditions:
(a) it is locally-incorporated;
(b) it has at least one subsidiary (within the meaning of Accounting Standard AASB 1024); and
(c) it is not itself a subsidiary (within the meaning of Accounting Standard AASB 1024) of an ADI that is locally-incorporated.
locally-incorporated means, subject to paragraph 18, incorporated in Australia.
locally-incorporated bank means, subject to paragraph 18, an ADI whose name appears under the heading ‘Australian-owned Banks’ or ‘Foreign Subsidiary Banks’ in the ADI list.
special service provider means an ADI whose name appears under the heading ‘Other ADIs’ in the ADI list (other than Cairns Penny Savings & Loans Limited).
specialist credit card institution means an ADI whose name appears under the heading ‘Specialist Credit Card Institutions (SCCIs)’ in the ADI list.
17.18.For the purposes of this reporting standard, Bank of China is taken to be a locally-incorporated ADI and a locally-incorporated bank.
18.19.If an ADI is not in the ADI list, then:
(a) if the ADI assumes or uses the word ‘bank’ in relation to its financial business, and it is locally-incorporated, it is taken to be a locally-incorporated bank for the purposes of this reporting standard;
(b) if the ADI assumes or uses the expression ‘building society’ in relation to its financial business, and it is locally-incorporated, it is taken to be a locally-incorporated building society for the purposes of this reporting standard;
(c) if the ADI assumes or uses the expression ‘credit union’, ‘credit society’ or ‘credit co-operative’ in relation to its financial business, and it is locally-incorporated, it is taken to be a locally-incorporated credit union for the purposes of this reporting standard; and
(d) if the ADI engages in credit card issuing or credit card acquiring, or both, and does not otherwise carry on banking business within the meaning of section 5 of the Banking Act 1959, and is locally-incorporated, it is taken to be a locally-incorporated specialist credit card institution for the purposes of this reporting standard.
19.20.APRA may in writing determine that an ADI is taken to be a locally-incorporated bank, locally-incorporated building society, locally-incorporated credit union, locally-incorporated special service provider or locally-incorporated specialist credit card institution for the purposes of this reporting standard (even if, under paragraph 17, 18 or 19, it comes within a different classification).
Interpretation - other definitions
20.21.In this reporting standard:
business days means ordinary business days, exclusive of Saturdays, Sundays and public holidays.
Principal Executive Officer means the principal executive officer of the ADI for the time being, by whatever name called, and whether or not he or she is a member of the governing board of the entity.
reporting period means a reporting period under paragraph 6 or, if applicable, paragraph 7.
The ADI list
Foreign-owned SCCIs
Locally Incorporated SCCIs
These companies are run by industry bodies and provide services (e.g. payments clearing) to member building societies and credit unions.
One ADI that provides general banking services which does not fall into the other categories.
This reporting standard is made under section 13 of the Financial Sector (Collection of Data) Act 2001 (the Collection of Data Act). It requires all authorised deposit-taking institutions (ADIs) that are locally-incorporated to report to APRA, generally on a quarterly basis, in relation to their capital adequacy.
This reporting standard outlines the overall requirements for the provision of relevant information to APRA. It should be read in conjunction with:
A locally-incorporated ADI must provide APRA with the information required by the version of Form ARF 110.0 designated for a ‘Licensed ADI’ for each reporting period.
A locally-incorporated ADI that is a highest parent entity in relation to a consolidated ADI group must also provide APRA with the information required by the version of Form ARF 110.0 designated for a ‘Consolidated Group’ for each reporting period.
(a) in electronic form, using one of the electronic submission mechanisms provided by the ‘Direct to APRA’ (also known as ‘D2A’) application; or
(b) manually completed on paper, which must be faxed or mailed to APRA’s head office.
Note: the Direct to APRA application software and paper forms may be obtained from APRA.
Subject to paragraph 7, a locally-incorporated ADI must provide the information required by this reporting standard for each quarter based on the financial year (within the meaning of the Corporations Act 2001) of the ADI.
APRA may, by notice in writing, change the reporting periods, or specified reporting periods, for a particular ADI, to require it to provide the information required by this reporting standard more frequently, or less frequently, having regard to:
(a) the particular circumstances of the ADI;
(b) the extent to which the information is required for the purposes of the prudential supervision of the ADI; and
(c) the requirements of the Reserve Bank of Australia or the Australian Bureau of Statistics.
(a) in the case of information required by paragraphs 3 and 4 from a locally-incorporated bank or locally-incorporated special service provider – 20 business days after the end of the reporting period to which the information relates; and
(b) in the case of information required by paragraphs 3 and 4 from a locally incorporated credit union, locally-incorporated building society, locally-incorporated specialist credit card institution or Cairns Penny Savings & Loans Limited – 15 business days after the end of the reporting period to which the information relates.
The information provided by an ADI under this reporting standard (except for the information required under paragraph 4) must be the product of processes and controls that have been reviewed and tested by the external auditor of the ADI. AGS 1008 ‘Audit Implications of Prudential Reporting Requirements for Authorised Deposit-taking Institutions’, issued by the Auditing and Assurances Standards Board of the Australian Accounting Research Foundation, provides guidance on the scope and nature of the review and testing required from external auditors. This review and testing must be done on an annual basis or more frequently if necessary to enable the external auditor to form an opinion on the accuracy and reliability of the data.
All information provided by an ADI under this reporting standard must be subject to processes and controls developed by the ADI for the internal review and authorisation of that information. It is the responsibility of the board and senior management of the ADI to ensure that an appropriate set of policies and procedures for the authorisation of data submitted to APRA is in place.
If an ADI submits information under this reporting standard using the ‘Direct to APRA’ software, it will be necessary for an officer of the ADI to digitally sign, authorise and encrypt the relevant data. For this purpose, APRA’s certificate authority will issue ‘digital certificates’, for use with the software, to officers of the ADI who have authority from the ADI to transmit the data to APRA.
If information under this reporting standard is provided in paper form, it must be signed on the front page of the relevant completed form by either:
(a) the Principal Executive Officer of the ADI; or
(b) the Chief Financial Officer of the ADI (whatever his or her official title may be).
(a) a form that is part of this reporting standard, and the instructions to such a form, to correct technical, programming or logical errors, inconsistencies or anomalies; or
(b) the instructions to a form, to clarify their application to the form
without changing any substantive requirement in the form or instructions.
Transitional
16.17.In this reporting standard:
Accounting Standard AASB 1024 means the accounting standard so designated made by the Australian Accounting Standards Board, being the accounting standard that applied in respect of reporting periods (within the meaning of the accounting standard) commencing immediately before 1 January 2005.
ADI means an authorised deposit-taking institution within the meaning of the Banking Act 1959.
ADI list means the attached ADI list.
building society means an ADI whose name appears under the heading ‘Building Societies’ in the ADI list.
consolidated ADI group means a group comprising:
(a) an ADI that is a highest parent entity; and
(b) each subsidiary (within the meaning of Accounting Standard AASB 1024) of that ADI, whether the subsidiary is locally-incorporated or not, other than a subsidiary that is excluded by the instructions attached to this standard.
credit union means an ADI whose name appears under the heading ‘Credit Unions’ in the ADI list.
highest parent entity means an ADI that satisfies all of the following conditions:
(a) it is locally-incorporated;
(b) it has at least one subsidiary (within the meaning of Accounting Standard AASB 1024); and
(c) it is not itself a subsidiary (within the meaning of Accounting Standard AASB 1024) of an ADI that is locally-incorporated.
locally-incorporated means, subject to paragraph 18, incorporated in Australia.
locally-incorporated bank means, subject to paragraph 18, an ADI whose name appears under the heading ‘Australian-owned Banks’ or ‘Foreign Subsidiary Banks’ in the ADI list.
special service provider means an ADI whose name appears under the heading ‘Other ADIs’ in the ADI list (other than Cairns Penny Savings & Loans Limited).
specialist credit card institution means an ADI whose name appears under the heading ‘Specialist Credit Card Institutions (SCCIs)’ in the ADI list.
17.18.For the purposes of this reporting standard, Bank of China is taken to be a locally-incorporated ADI and a locally-incorporated bank.
18.19.If an ADI is not in the ADI list, then:
(a) if the ADI assumes or uses the word ‘bank’ in relation to its financial business, and it is locally-incorporated, it is taken to be a locally-incorporated bank for the purposes of this reporting standard;
(b) if the ADI assumes or uses the expression ‘building society’ in relation to its financial business, and it is locally-incorporated, it is taken to be a locally-incorporated building society for the purposes of this reporting standard;
(c) if the ADI assumes or uses the expression ‘credit union’, ‘credit society’ or ‘credit co-operative’ in relation to its financial business, and it is locally-incorporated, it is taken to be a locally-incorporated credit union for the purposes of this reporting standard; and
(d) if the ADI engages in credit card issuing or credit card acquiring, or both, and does not otherwise carry on banking business within the meaning of section 5 of the Banking Act 1959, and is locally-incorporated, it is taken to be a locally-incorporated specialist credit card institution for the purposes of this reporting standard.
19.20.APRA may in writing determine that an ADI is taken to be a locally-incorporated bank, locally-incorporated building society, locally-incorporated credit union, locally-incorporated special service provider or locally-incorporated specialist credit card institution for the purposes of this reporting standard (even if, under paragraph 17, 18 or 19, it comes within a different classification).
Interpretation - other definitions
20.21.In this reporting standard:
business days means ordinary business days, exclusive of Saturdays, Sundays and public holidays.
Principal Executive Officer means the principal executive officer of the ADI for the time being, by whatever name called, and whether or not he or she is a member of the governing board of the entity.
reporting period means a reporting period under paragraph 6 or, if applicable, paragraph 7.
This reporting standard is made under section 13 of the Financial Sector (Collection of Data) Act 2001 (the Collection of Data Act). It requires all authorised deposit-taking institutions (ADIs) that are locally-incorporated to report to APRA, generally on a quarterly basis, in relation to their capital adequacy.
This reporting standard outlines the overall requirements for the provision of relevant information to APRA. It should be read in conjunction with:
Purpose
Application and commencement
A locally-incorporated ADI must provide APRA with the information required by the version of Form ARF 110.0 designated for a ‘Licensed ADI’ for each reporting period.
A locally-incorporated ADI that is a highest parent entity in relation to a consolidated ADI group must also provide APRA with the information required by the version of Form ARF 110.0 designated for a ‘Consolidated Group’ for each reporting period.
(a) in electronic form, using one of the electronic submission mechanisms provided by the ‘Direct to APRA’ (also known as ‘D2A’) application; or
(b) manually completed on paper, which must be faxed or mailed to APRA’s head office.
Note: the Direct to APRA application software and paper forms may be obtained from APRA.
Subject to paragraph 7, a locally-incorporated ADI must provide the information required by this reporting standard for each quarter based on the financial year (within the meaning of the Corporations Act 2001) of the ADI.
APRA may, by notice in writing, change the reporting periods, or specified reporting periods, for a particular ADI, to require it to provide the information required by this reporting standard more frequently, or less frequently, having regard to:
(a) the particular circumstances of the ADI;
(b) the extent to which the information is required for the purposes of the prudential supervision of the ADI; and
(c) the requirements of the Reserve Bank of Australia or the Australian Bureau of Statistics.
(a) in the case of information required by paragraphs 3 and 4 from a locally-incorporated bank or locally-incorporated special service provider – 20 business days after the end of the reporting period to which the information relates; and
(b) in the case of information required by paragraphs 3 and 4 from a locally incorporated credit union, locally-incorporated building society, locally-incorporated specialist credit card institution or Cairns Penny Savings & Loans Limited – 15 business days after the end of the reporting period to which the information relates.
The information provided by an ADI under this reporting standard (except for the information required under paragraph 4) must be the product of processes and controls that have been reviewed and tested by the external auditor of the ADI. AGS 1008 ‘Audit Implications of Prudential Reporting Requirements for Authorised Deposit-taking Institutions’, issued by the Auditing and Assurances Standards Board of the Australian Accounting Research Foundation, provides guidance on the scope and nature of the review and testing required from external auditors. This review and testing must be done on an annual basis or more frequently if necessary to enable the external auditor to form an opinion on the accuracy and reliability of the data.
All information provided by an ADI under this reporting standard must be subject to processes and controls developed by the ADI for the internal review and authorisation of that information. It is the responsibility of the board and senior management of the ADI to ensure that an appropriate set of policies and procedures for the authorisation of data submitted to APRA is in place.
If an ADI submits information under this reporting standard using the ‘Direct to APRA’ software, it will be necessary for an officer of the ADI to digitally sign, authorise and encrypt the relevant data. For this purpose, APRA’s certificate authority will issue ‘digital certificates’, for use with the software, to officers of the ADI who have authority from the ADI to transmit the data to APRA.
If information under this reporting standard is provided in paper form, it must be signed on the front page of the relevant completed form by either:
(a) the Principal Executive Officer of the ADI; or
(b) the Chief Financial Officer of the ADI (whatever his or her official title may be).
(a) a form that is part of this reporting standard, and the instructions to such a form, to correct technical, programming or logical errors, inconsistencies or anomalies; or
(b) the instructions to a form, to clarify their application to the form
without changing any substantive requirement in the form or instructions.
Transitional
16.17.In this reporting standard:
Accounting Standard AASB 1024 means the accounting standard so designated made by the Australian Accounting Standards Board, being the accounting standard that applied in respect of reporting periods (within the meaning of the accounting standard) commencing immediately before 1 January 2005.
ADI means an authorised deposit-taking institution within the meaning of the Banking Act 1959.
ADI list means the attached ADI list.
building society means an ADI whose name appears under the heading ‘Building Societies’ in the ADI list.
consolidated ADI group means a group comprising:
(a) an ADI that is a highest parent entity; and
(b) each subsidiary (within the meaning of Accounting Standard AASB 1024) of that ADI, whether the subsidiary is locally-incorporated or not, other than a subsidiary that is excluded by the instructions attached to this standard.
credit union means an ADI whose name appears under the heading ‘Credit Unions’ in the ADI list.
highest parent entity means an ADI that satisfies all of the following conditions:
(a) it is locally-incorporated;
(b) it has at least one subsidiary (within the meaning of Accounting Standard AASB 1024); and
(c) it is not itself a subsidiary (within the meaning of Accounting Standard AASB 1024) of an ADI that is locally-incorporated.
locally-incorporated means, subject to paragraph 18, incorporated in Australia.
locally-incorporated bank means, subject to paragraph 18, an ADI whose name appears under the heading ‘Australian-owned Banks’ or ‘Foreign Subsidiary Banks’ in the ADI list.
special service provider means an ADI whose name appears under the heading ‘Other ADIs’ in the ADI list (other than Cairns Penny Savings & Loans Limited).
specialist credit card institution means an ADI whose name appears under the heading ‘Specialist Credit Card Institutions (SCCIs)’ in the ADI list.
17.18.For the purposes of this reporting standard, Bank of China is taken to be a locally-incorporated ADI and a locally-incorporated bank.
18.19.If an ADI is not in the ADI list, then:
(a) if the ADI assumes or uses the word ‘bank’ in relation to its financial business, and it is locally-incorporated, it is taken to be a locally-incorporated bank for the purposes of this reporting standard;
(b) if the ADI assumes or uses the expression ‘building society’ in relation to its financial business, and it is locally-incorporated, it is taken to be a locally-incorporated building society for the purposes of this reporting standard;
(c) if the ADI assumes or uses the expression ‘credit union’, ‘credit society’ or ‘credit co-operative’ in relation to its financial business, and it is locally-incorporated, it is taken to be a locally-incorporated credit union for the purposes of this reporting standard; and
(d) if the ADI engages in credit card issuing or credit card acquiring, or both, and does not otherwise carry on banking business within the meaning of section 5 of the Banking Act 1959, and is locally-incorporated, it is taken to be a locally-incorporated specialist credit card institution for the purposes of this reporting standard.
19.20.APRA may in writing determine that an ADI is taken to be a locally-incorporated bank, locally-incorporated building society, locally-incorporated credit union, locally-incorporated special service provider or locally-incorporated specialist credit card institution for the purposes of this reporting standard (even if, under paragraph 17, 18 or 19, it comes within a different classification).
Interpretation - other definitions
20.21.In this reporting standard:
business days means ordinary business days, exclusive of Saturdays, Sundays and public holidays.
Principal Executive Officer means the principal executive officer of the ADI for the time being, by whatever name called, and whether or not he or she is a member of the governing board of the entity.
reporting period means a reporting period under paragraph 6 or, if applicable, paragraph 7.
The ADI list
Foreign-owned SCCIs
Locally Incorporated SCCIs
These companies are run by industry bodies and provide services (e.g. payments clearing) to member building societies and credit unions.
One ADI that provides general banking services which does not fall into the other categories.
Foreign-owned SCCIs
Locally Incorporated SCCIs
These companies are run by industry bodies and provide services (e.g. payments clearing) to member building societies and credit unions.
One ADI that provides general banking services which does not fall into the other categories.
The Capital Adequacy form sets out the means of calculating an ADI’s capital ratios at the stand-alone and consolidated banking group level. In completing this form, reference should be made to Prudential Standard APS 110 Capital Adequacy and Prudential Standard APS 111 Capital Adequacy: Measurement of Capital and their accompanying Guidance Notes.
General directions and notes
Reporting entity
The Capital Adequacy form is to be completed by all locally incorporated ADIs (including Specialist Credit Card Institutions (SCCIs)) on both a Licensed ADI and Consolidated ADI Group basis (where applicable). Foreign ADIs[1] and SCCIs operating through branches in Australia are not required to complete this form.
Licensed ADI
This refers to the operations of the reporting ADI at Level 1 (i.e. the stand-alone level) defined in accordance with Prudential Standard APS 110 Capital Adequacy.
Consolidated ADI group
This refers to the consolidated group of the reporting ADI at Level 2 (i.e. the consolidated banking group level) defined in accordance with Prudential Standard APS 110 Capital Adequacy.
The basis of consolidation required in this form is in accordance with the prudential Consolidated ADI Group. The prudential consolidated group should also be determined in accordance with Australian accounting standards, notably AASB 1024 ‘Consolidated Accounts’ with the following modifications:
(1) Include the following:
(2) Exclude subsidiary entities involved in the following business activities:
insurance businesses (including friendly societies and health funds);
acting as manager, responsible entity, approved trustee, trustee or similar role in relation to funds management or the securitisation of assets; and
non-financial (commercial) operations.
Note: ADIs should consult APRA in case of doubt as to whether a subsidiary or controlled entity that engaged in non-financial operations should be consolidated at Level 2 for capital adequacy purposes.
Reporting period
The form is to be completed as at the last day of the stated reporting quarter. Locally incorporated banks and Special Service Providers should submit the completed form to APRA within 20 business days after the end of the relevant reporting quarter. Credit Unions, Cairns Penny Savings & Loans Limited, Building Societies and Specialist Credit Card Institutions (SCCIs) should submit the completed form to APRA within 15 business days after the end of the relevant reporting quarter.
Unit of measurement
Banks are asked to complete the form in millions of Australian dollars rounded to one decimal place. Special Service Providers, Building Societies, Credit Unions, SCCIs and Cairns Penny Savings & Loans Limited are asked to complete the form in whole Australian dollars (no decimal place).
Amounts denominated in foreign currency are to be converted to AUD in accordance with AASB 1012 ‘Foreign Currency Translation’.
The general requirements of AASB 1012 for translation are:
Monetary items are defined to mean money held and assets and liabilities that are to be received or paid in fixed or determinable amounts of money.
Monetary items arising under foreign currency derivative contracts at the reporting date must be translated as follows:
Specific instructions
The following instructions are applicable to both the Capital Adequacy (Licensed ADI) form and the Capital Adequacy (Consolidated Group) form (where relevant).
Section A: Capital base
For capital instruments issued at a discount or in a partly paid form, only the net proceeds of such an issue are counted as capital.
Capital profits reserve
Include realised gains on the disposal of revalued assets that have not been transferred from the Asset Revaluation Reserve to Retained Earnings.
Foreign currency translation reserve
Include the exchange rate differences arising on translation of assets and liabilities in accordance with AASB 1012.
Current year’s earnings net of expected dividends and tax expenses
Report current year’s profits (or losses) net of estimated tax obligations and dividend payments (after adjustment for any dividend reinvestment plan) at Level 1/Level 2 (as appropriate).
Minority interests in Tier 1 capital of subsidiaries
Include any minority interests in Tier 1 capital of subsidiaries on consolidation at Level 2.
Non-cumulative irredeemable preference shares
To be eligible for inclusion in Tier 1 capital at Level 1/Level 2 (as appropriate), these shares must satisfy the criteria set out in Guidance Note AGN 111.1 Tier 1 Capital.
Innovative Tier 1 capital instruments approved by APRA
Include capital instruments (other than ordinary shares and non-cumulative irredeemable preference shares) that APRA has agreed to count as part of Tier 1 capital at Level 1/Level 2 (as appropriate).
Note: A capital instrument is not eligible for inclusion in Tier 1 capital (before deductions), whether at Level 1 or Level 2, to the extent that its inclusion will result in the aggregate amount of non-cumulative irredeemable preference shares and innovative Tier 1 capital instruments exceeding 25% of the sum of all the other Tier 1 capital components. Any excess amounts ineligible for inclusion as Tier 1 capital as a result of this limit are to be included in Upper Tier 2 capital.
Deductions from Tier 1 capital
Goodwill
Deduct goodwill paid on equity investments in subsidiaries on consolidation at Level 2. Goodwill (determined in accordance with AASB 1013 ‘Accounting for Goodwill’) represents the excess of the cost of acquisition over the fair value of the net tangible assets of the acquired entity at the time of acquisition.
Intangible component of investments in subsidiaries and other entities
Deduct the intangible component of investments (e.g. purchased goodwill) in subsidiaries and other entities at Level 1 (see paragraph 2 in Guidance Note AGN 111.4 Capital Deductions).
Intangible component of investments in non-consolidated subsidiaries and other non-Level 2 entities
Deduct the intangible component of investments (e.g. purchased goodwill) in non-consolidated subsidiaries (see Guidance Note AGN 110.2 Non-consolidated Subsidiaries) and other entities that do not form part of the consolidated banking group at Level 2 (see paragraphs 2 and 3 in Guidance Note AGN 111.4 Capital Deductions).
Other intangible assets
Deduct all other intangible assets at Level 1/Level 2 (as appropriate). Exclude hardware and software costs.
Refer paragraph 5 Guidance Note AGN 111.4 Capital Deductions effective 1 July 2004 for required treatment of specific items below:
Detail separately:
Other intangible assets:
Future income tax benefits
The amount of future income tax benefits (other than those associated with general provisions for doubtful debts) to be deducted from Tier 1 capital at Level 1 and Level 2 should be net of any provision for deferred income tax liabilities. Where the provision for deferred income tax liabilities exceeds the amount of future income tax benefits, the excess cannot be added to Tier 1 capital (i.e. the net deduction is zero).
Holdings of own Tier 1 capital instruments and any unused trading limit agreed with APRA
See paragraph 4 in Guidance Note AGN 111.4 Capital Deductions.
Equity and other capital investments in associated lenders mortgage insurers (Level 1)
Equity and other capital investments in non-consolidated captive lenders mortgage insurers (Level 2)
Deduct all equity and other capital investments in captive lenders mortgage insurers at Level 1/Level 2 (as appropriate). (These entities are not consolidated for capital adequacy purposes – see Guidance Note AGN 110.2 Non-consolidated Subsidiaries). Other capital investments include debt capital instruments held and provision of any credit support of a capital nature (e.g. provision of a first loss guarantee).
Equity investments in non-subsidiary entities exceeding prescribed limits
Deduct all equity investments in non-subsidiary entities at Level 1/Level 2 (as appropriate) that are not operating in the field of finance in excess of 0.25% of the ADI’s Level 2 Tier 1 capital for an individual investment or 5% of the ADI’s Level 2 Tier 1 capital in aggregate.
Eligible Tier 1 capital
Sum all the Tier 1 capital components less all specified deductions from Tier 1 capital. Eligible Tier 1 capital must constitute at least 50% of the ADI’s capital base, both at Level 1 and Level 2 (except in the formative years of mutually owned ADIs as approved by APRA).
2.1 Upper Tier 2 capital
Asset revaluation reserves
To be eligible for inclusion in Upper Tier 2 capital at Level 1 and Level 2, reserves arising from the revaluation of premises and securities must satisfy the conditions set out in Guidance Note AGN 111.2 Tier 2 Capital.
General provisions for doubtful debts
The amount of general provisions for doubtful debts to be included in Upper Tier 2 capital at Level 1 and Level 2 should be net of any associated future income tax benefits on a gross basis, and is limited to a maximum of 1.25% of total risk-weighted exposures (see Guidance Note AGN 110.4 Risk-based Capital Adequacy Framework for definition).
The amount of provisions included must be created against future, presently unidentified losses and must be freely available to meet any losses that may subsequently materialise. Any general provisions created against specific or identified losses and against identified deterioration in the value of particular assets, whether individual or grouped, foreign or domestic, are not eligible for inclusion in Upper Tier 2 capital.
Cumulative irredeemable preference shares
Mandatory convertible notes and similar capital instruments
Perpetual subordinated debt
These are hybrid capital instruments, which combine certain characteristics of equity capital and debt. To be eligible as Upper Tier 2 capital at Level 1 and Level 2, these instruments must satisfy the criteria set out in Guidance Note AGN 111.2 Tier 2 Capital.
Deductions from Upper Tier 2 capital
Holdings of own Upper Tier 2 capital instruments and any unused trading limit agreed with APRA
See paragraph 4 in Guidance Note AGN 111.4 Capital Deductions.
Eligible Upper Tier 2 capital
Sum all the Upper Tier 2 capital components less any deductions from Upper Tier 2 capital.
2.2 Lower Tier 2 capital
Term subordinated debt
Limited life redeemable preference shares
Other Lower Tier 2 capital instruments approved by APRA
To be eligible as Lower Tier 2 capital at Level 1 and Level 2, these instruments must satisfy the criteria set out in Guidance Note AGN 111.2 Tier 2 Capital.
The amount of an instrument eligible for inclusion in Lower Tier 2 capital at Level 1 and Level 2 is to be amortised on a straight line basis at a rate of 20% per annum over the last 4 years to maturity as follows:
| Years to Maturity | Amount eligible for inclusion in Lower Tier 2 capital |
|---|---|
| More than 4 | 100% |
| Less than and including 4 but more than 3 | 80% |
| Less than and including 3 but more than 2 | 60% |
| Less than and including 2 but more than 1 | 40% |
| Less than and including 1 | 20% |
Deductions from Lower Tier 2 capital
Holdings of own Lower Tier 2 capital instruments and any unused trading limit agreed with APRA
See paragraph 4 in Guidance Note AGN 111.4 Capital Deductions.
Eligible Lower Tier 2 capital
Sum all the Lower Tier 2 capital components (net of amortisation) less any deductions from Lower Tier 2 capital. Eligible Lower Tier 2 capital at Level 1 and Level 2 is limited to a maximum of 50% of the ADI’s eligible Tier 1 capital at the respective level (except in the formative years of mutually owned ADIs as approved by APRA).
Eligible Tier 2 capital
This is the sum of eligible Upper and Lower Tier 2 capital at Level 1 and Level 2 as appropriate. Eligible Tier 2 capital at Level 1 and Level 2 is limited to a maximum of 100% of the ADI’s eligible Tier 1 capital at the respective level (except in the formative years of mutually owned ADIs as approved by APRA).
This is the sum of eligible Tier 1 and Tier 2 capital at Level 1 and Level 2 as appropriate.
3.1 Deductions from total capital
Equity and other capital investments in other ADIs and equivalent overseas deposit-taking institutions (and their subsidiaries)
Deduct equity and other capital investments in other ADIs or equivalent overseas deposit-taking institutions (and their subsidiaries) at Level 1 and Level 2 as appropriate, except where:
a) that other ADI or equivalent overseas deposit-taking institution is wholly owned or effectively controlled (whether directly or indirectly) by the reporting ADI, and has been consolidated with the reporting ADI at Level 2 for capital adequacy purposes; or
b) that other ADI’s or equivalent overseas deposit-taking institution’s capital instruments are held for trading purposes in which case they are to be included in the reporting ADI’s total risk-weighted exposures at Level 1 and Level 2 as appropriate in accordance with Prudential Standard APS 113 Capital Adequacy: Market Risk.
Other capital investments include debt capital instruments held and provision of any credit support of a capital nature (e.g. provision of a first loss guarantee).
Equity and other capital investments in authorised non-operating holding companies of ADIs
Deduct equity and other capital investments in authorised non-operating holding companies of ADIs at Level 1/Level 2 (as appropriate), unless these are held for trading purposes in which case they are to be included in the ADI’s total risk-weighted exposures at the respective level in accordance with Prudential Standard APS 113 Capital Adequacy: Market Risk.
Other capital investments include debt capital instruments held and provision of any credit support of a capital nature (e.g. provision of a first loss guarantee).
Equity and other capital investments in non-consolidated subsidiaries and controlled entities
Deduct equity and other capital investments in non-consolidated subsidiaries or controlled entities (other than captive lenders mortgage insurers) after any intangible component of the investment is deducted from Tier 1 capital at Level 2 (see Guidance Note AGN 110.2 Non-consolidated Subsidiaries and paragraphs 2 and 3 in Guidance Note AGN 111.4 Capital Deductions).
Other capital investments include debt capital instruments held and provision of any credit support of a capital nature (e.g. provision of a first loss guarantee).
Credit support of a capital nature provided to other entities (Level 1)
Credit support of a capital nature provided to other non-Level 2 entities (Level 2)
Deduct any credit support of a capital nature provided to other entities at Level 1 or to other entities that do not form part of the consolidated banking group at Level 2 as appropriate, such as provision of a first loss guarantee, including any undertakings by the ADI to absorb designated first level of losses on claims supported by it (first loss facilities associated with funds management and the securitisation of assets should be deducted in accordance with the requirements set out in Prudential Standard APS 120 Funds Management & Securitisation).
Non-repayable loans advanced by the ADI under APRA’s certified industry support arrangements
Deduct any non-repayable loans advanced by the reporting ADI to another ADI under APRA’s certified industry support arrangements at both Level 1 and Level 2.
Total capital deductions
Sum all deductions from total capital at Level 1 and Level 2 as appropriate.
This is equal to total capital less total capital deductions at Level 1 and Level 2 as appropriate.
5.1. Total general provisions for doubtful debts
Report the total amount of general provisions for doubtful debts net of any associated future income tax benefits on a gross basis. General provisions should be reported irrespective of whether they are included in the capital base.
Note: The total general provisions for doubtful debts reported in the memo item should not be limited to 1.25 per cent of total risk-weighted exposures.
The amount of provisions included must be created against future, presently unidentified losses and must be freely available to meet any losses that may subsequently materialise. Any general provisions created against specific or identified losses and against identified deterioration in the value of particular assets, whether individual or grouped, foreign or domestic, should not be recorded.
Section B: Risk profile
This section allocates balance sheet amounts and the credit equivalent amounts of off-balance sheet business at Level 1 and Level 2 as appropriate to individual credit risk weight categories.
Column 1.1. classifies the gross amounts of balance sheet assets (i.e. the principal amounts of on-balance sheet assets after adjustment for any accrued interest, revaluations, depreciation and specific provisions as appropriate) into risk weight categories, based on the nature of counterparty or the underlying collateral or guarantor where the balance sheet assets are secured against eligible collateral or guarantee recognised by APRA (see Guidance Note AGN 112.1 Risk-Weighted On-Balance Sheet Credit Exposures).
Column 1.2. equals the reported figure in Column 1 multiplied by the applicable Risk Weight.
Column 2.1. classifies the credit equivalent amounts (CEAs) of off-balance sheet business (including both market and non-market related transactions) into risk weight categories, based on the nature of the counterparty or the underlying collateral or guarantor where the CEAs of the off-balance sheet business are secured against eligible collateral or guarantee recognised by APRA (see Guidance Note AGN 112.1 Risk-Weighted Off-Balance Sheet Credit Exposures).
Column 2.2. equals the reported figure in Column 3 multiplied by the applicable risk weight.
For each risk category, Column 3 equals the sum of Column 1.2 and Column 2.2.
1.5. Total credit risk is the sum of the assessed credit risk exposures (both on- and off-balance sheet).
Market risk charge (for both specific and general market risk) as reported in ARF 113.0 Market Risk is determined in accordance with Prudential Standard APS 113 Capital Adequacy: Market Risk. For capital adequacy purposes, the reported amount must be adjusted by multiplying it by a constant factor of 12.5 (i.e. the reciprocal of the minimum capital ratio of 8%) to obtain an equivalent risk-weighted exposure. The resulting figure is then added to the total risk-weighted on and off balance sheet credit exposures, to derive the total risk-weighted exposures (i.e. the denominator of the capital ratio).
Other charges as required by APRA should only be reported if agreed to by APRA.
Section C: Risk ratio
This is calculated by dividing eligible capital base by total risk-weighted exposures (i.e. the amount of capital base reported in Section A divided by the sum of total credit risk exposures, market risk charge and other charges as required by APRA reported in Section B).
Note on references to Accounting Standards
This Note is about references in these instructions to an accounting standard or accounting standards, e.g. where the instructions say that something must be done in accordance with a particular AASB or international accounting standard, or must be done in accordance with the accounting standards (however described) generally.
Where you see such a reference, you must read it as meaning the version of the accounting standard, or versions of the accounting standards, applying to reporting periods (within the meaning of the accounting standards) beginning immediately before 1 January 2005.
Accordingly, the new AASB standards for 2005 are not to be applied.
Similarly, a reference to principles or conventions (however described) governing an accounting procedure or treatment shall be taken to refer to principles or conventions applicable in relation to reporting periods (within the meaning of the accounting standards) that began immediately before 1 January 2005.
Sourced from the Federal Register of Legislation (legislation.gov.au), CC BY 4.0.
This reporting standard is made under section 13 of the Financial Sector (Collection of Data) Act 2001 (the Collection of Data Act). It requires all authorised deposit-taking institutions (ADIs) that are locally-incorporated to report to APRA, generally on a quarterly basis, in relation to their capital adequacy.
This reporting standard outlines the overall requirements for the provision of relevant information to APRA. It should be read in conjunction with:
Purpose
Application and commencement
A locally-incorporated ADI must provide APRA with the information required by the version of Form ARF 110.0 designated for a ‘Licensed ADI’ for each reporting period.
A locally-incorporated ADI that is a highest parent entity in relation to a consolidated ADI group must also provide APRA with the information required by the version of Form ARF 110.0 designated for a ‘Consolidated Group’ for each reporting period.
(a) in electronic form, using one of the electronic submission mechanisms provided by the ‘Direct to APRA’ (also known as ‘D2A’) application; or
(b) manually completed on paper, which must be faxed or mailed to APRA’s head office.
Note: the Direct to APRA application software and paper forms may be obtained from APRA.
Subject to paragraph 7, a locally-incorporated ADI must provide the information required by this reporting standard for each quarter based on the financial year (within the meaning of the Corporations Act 2001) of the ADI.
APRA may, by notice in writing, change the reporting periods, or specified reporting periods, for a particular ADI, to require it to provide the information required by this reporting standard more frequently, or less frequently, having regard to:
(a) the particular circumstances of the ADI;
(b) the extent to which the information is required for the purposes of the prudential supervision of the ADI; and
(c) the requirements of the Reserve Bank of Australia or the Australian Bureau of Statistics.
(a) in the case of information required by paragraphs 3 and 4 from a locally-incorporated bank or locally-incorporated special service provider – 20 business days after the end of the reporting period to which the information relates; and
(b) in the case of information required by paragraphs 3 and 4 from a locally incorporated credit union, locally-incorporated building society, locally-incorporated specialist credit card institution or Cairns Penny Savings & Loans Limited – 15 business days after the end of the reporting period to which the information relates.
The information provided by an ADI under this reporting standard (except for the information required under paragraph 4) must be the product of processes and controls that have been reviewed and tested by the external auditor of the ADI. AGS 1008 ‘Audit Implications of Prudential Reporting Requirements for Authorised Deposit-taking Institutions’, issued by the Auditing and Assurances Standards Board of the Australian Accounting Research Foundation, provides guidance on the scope and nature of the review and testing required from external auditors. This review and testing must be done on an annual basis or more frequently if necessary to enable the external auditor to form an opinion on the accuracy and reliability of the data.
All information provided by an ADI under this reporting standard must be subject to processes and controls developed by the ADI for the internal review and authorisation of that information. It is the responsibility of the board and senior management of the ADI to ensure that an appropriate set of policies and procedures for the authorisation of data submitted to APRA is in place.
If an ADI submits information under this reporting standard using the ‘Direct to APRA’ software, it will be necessary for an officer of the ADI to digitally sign, authorise and encrypt the relevant data. For this purpose, APRA’s certificate authority will issue ‘digital certificates’, for use with the software, to officers of the ADI who have authority from the ADI to transmit the data to APRA.
If information under this reporting standard is provided in paper form, it must be signed on the front page of the relevant completed form by either:
(a) the Principal Executive Officer of the ADI; or
(b) the Chief Financial Officer of the ADI (whatever his or her official title may be).
(a) a form that is part of this reporting standard, and the instructions to such a form, to correct technical, programming or logical errors, inconsistencies or anomalies; or
(b) the instructions to a form, to clarify their application to the form
without changing any substantive requirement in the form or instructions.
Transitional
16.17.In this reporting standard:
Accounting Standard AASB 1024 means the accounting standard so designated made by the Australian Accounting Standards Board, being the accounting standard that applied in respect of reporting periods (within the meaning of the accounting standard) commencing immediately before 1 January 2005.
ADI means an authorised deposit-taking institution within the meaning of the Banking Act 1959.
ADI list means the attached ADI list.
building society means an ADI whose name appears under the heading ‘Building Societies’ in the ADI list.
consolidated ADI group means a group comprising:
(a) an ADI that is a highest parent entity; and
(b) each subsidiary (within the meaning of Accounting Standard AASB 1024) of that ADI, whether the subsidiary is locally-incorporated or not, other than a subsidiary that is excluded by the instructions attached to this standard.
credit union means an ADI whose name appears under the heading ‘Credit Unions’ in the ADI list.
highest parent entity means an ADI that satisfies all of the following conditions:
(a) it is locally-incorporated;
(b) it has at least one subsidiary (within the meaning of Accounting Standard AASB 1024); and
(c) it is not itself a subsidiary (within the meaning of Accounting Standard AASB 1024) of an ADI that is locally-incorporated.
locally-incorporated means, subject to paragraph 18, incorporated in Australia.
locally-incorporated bank means, subject to paragraph 18, an ADI whose name appears under the heading ‘Australian-owned Banks’ or ‘Foreign Subsidiary Banks’ in the ADI list.
special service provider means an ADI whose name appears under the heading ‘Other ADIs’ in the ADI list (other than Cairns Penny Savings & Loans Limited).
specialist credit card institution means an ADI whose name appears under the heading ‘Specialist Credit Card Institutions (SCCIs)’ in the ADI list.
17.18.For the purposes of this reporting standard, Bank of China is taken to be a locally-incorporated ADI and a locally-incorporated bank.
18.19.If an ADI is not in the ADI list, then:
(a) if the ADI assumes or uses the word ‘bank’ in relation to its financial business, and it is locally-incorporated, it is taken to be a locally-incorporated bank for the purposes of this reporting standard;
(b) if the ADI assumes or uses the expression ‘building society’ in relation to its financial business, and it is locally-incorporated, it is taken to be a locally-incorporated building society for the purposes of this reporting standard;
(c) if the ADI assumes or uses the expression ‘credit union’, ‘credit society’ or ‘credit co-operative’ in relation to its financial business, and it is locally-incorporated, it is taken to be a locally-incorporated credit union for the purposes of this reporting standard; and
(d) if the ADI engages in credit card issuing or credit card acquiring, or both, and does not otherwise carry on banking business within the meaning of section 5 of the Banking Act 1959, and is locally-incorporated, it is taken to be a locally-incorporated specialist credit card institution for the purposes of this reporting standard.
19.20.APRA may in writing determine that an ADI is taken to be a locally-incorporated bank, locally-incorporated building society, locally-incorporated credit union, locally-incorporated special service provider or locally-incorporated specialist credit card institution for the purposes of this reporting standard (even if, under paragraph 17, 18 or 19, it comes within a different classification).
Interpretation - other definitions
20.21.In this reporting standard:
business days means ordinary business days, exclusive of Saturdays, Sundays and public holidays.
Principal Executive Officer means the principal executive officer of the ADI for the time being, by whatever name called, and whether or not he or she is a member of the governing board of the entity.
reporting period means a reporting period under paragraph 6 or, if applicable, paragraph 7.
The ADI list
This is an opening excerpt, not the complete document.