IFRSs and Bank Tier 1 capital in Australia

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09 Sep 2005

The Australian Prudential Regulation Authority has released the second of two discussion papers setting out its proposed regulatory response to the adoption of IFRSs by APRA-regulated institutions.

APRA is the prudential regulator of the Australian financial services industry. It oversees banks, credit unions, building societies, and insurance companies, among others. Australia has adopted national GAAP that starting in 2005 is virtually equivalent to IFRSs. The paper deals with the treatment of eligible Tier 1 capital instruments and securitisation for authorised deposit-taking institutions and general insurers. APRA is proposing to de-couple the definition of capital instruments eligible for Tier 1 capital from Australian accounting standards. At the same time, it is proposing to harmonise its approach to innovative capital instruments with the decisions of the Basel Committee on Banking Supervision and regulatory practice in major jurisdictions. APRA is also proposing to de-couple the assessment of securitised assets for capital adequacy purposes from the accounting treatment of these assets. Comments are due 28 October 2005. Click to download the APRA's new discussion paper, (PDF 134k). Please see our 27 February 2005 News Story for details about the first APRA discussion paper and an earlier overview paper.

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