Document ID: chunk:federal_register_of_legislation:F2024L01518:body:0:p6
Version: federal_register_of_legislation:F2024L01518
Segment Type: other
Provision Reference: 
Character Range: 14947–17711

determine prudential capital requirements (PCRs) for an ADI. The PCRs, expressed as a percentage of total risk-weighted assets (RWA), will be set by reference to Common Equity Tier 1 Capital, Tier 1 Capital and Total Capital. PCRs may be determined at Level 1, Level 2 or both.
 2.          The minimum PCRs that an ADI must maintain at all times are:
         1.           a Common Equity Tier 1 Capital ratio of 4.5 per cent;
         2.           a Tier 1 Capital ratio of 6.0 per cent; and
         3.           a Total Capital ratio of 8.0 per cent.
APRA may determine higher PCRs for an ADI and may change an ADI's PCRs at any time, including to incorporate additional capital required for loss-absorbing capacity, or on account of other supervisory review. An ADI must not publicly disclose its PCRs.
 1.          An ADI must maintain risk-based regulatory capital ratios above its PCRs at all times. Risk-based regulatory capital ratios are to be calculated in accordance with Attachment A to this Prudential Standard.

Capital floor
 1.          An IRB ADI must calculate its total RWA for capital adequacy purposes in accordance with paragraph 4 of Attachment A to this Prudential Standard.

Capital conservation buffer
 1.          An ADI must hold a capital conservation buffer above its Common Equity Tier 1 Capital PCR or is otherwise subject to the capital distribution constraints set out in paragraph 30 of this Prudential Standard. An ADI must meet its capital conservation buffer with Common Equity Tier 1 Capital. The capital conservation buffer is:
         1.           2.5 per cent of total RWA for standardised ADIs. The sum of the Common Equity Tier 1 PCR plus the capital conservation buffer will be no less than 7.0 per cent of the standardised ADI's total RWA; or
         2.           3.75 per cent of total RWA for IRB ADIs. The sum of the Common Equity Tier 1 PCR plus the capital conservation buffer will be no less than 8.25 per cent of the IRB ADI's total RWA.
    APRA may vary the capital conservation buffer requirement for an ADI or class of ADIs.
 1.          APRA may determine an ADI to be a domestic systemically important bank. A domestic systemically important bank must add an additional 1.0 per cent to its capital conservation buffer requirement under paragraph 27 of this Prudential Standard.
 2.          Any amount of Common Equity Tier 1 Capital required to meet an ADI's PCR for Tier 1 Capital or Total Capital, above the amount required to meet the PCR for Common Equity Tier 1 Capital, is not eligible to be included in the capital conservation buffer.
 3.          Capital distribution constraints apply if an ADI's Common Equity Tier 1 Capital ratio falls within the capital buffer ranges outlined in Table 1