Document ID: chunk:federal_register_of_legislation:F2022L01562:body:0:p1
Version: federal_register_of_legislation:F2022L01562
Segment Type: other
Provision Reference: 
Character Range: 0–3102

Banking (prudential standard) determination No. 5 of 2022

Prudential Standard APS 111 Capital Adequacy: Measurement of Capital

Banking Act 1959

I, Renée Roberts, a delegate of APRA:

(a)     under subsection 11AF(3) of the Banking Act 1959 (the Act) REVOKE Banking (prudential standard) determination No. 3 of 2021 including Prudential Standard APS 111 Capital Adequacy: Measurement of Capital made under that determination; and

(b)     under subsection 11AF(1) of the Act DETERMINE Prudential Standard APS 111 Capital Adequacy: Measurement of Capital in the form set out in the schedule, which applies to all ADIs and authorised NOHCs to the extent provided in paragraphs 2 to 5 of the prudential standard.

This instrument commences on 1 January 2023.

Dated: 1 December 2022

[Signed]

Renée Roberts
Executive Director
Policy and Advice Division
Interpretation

      In this instrument:

APRA means the Australian Prudential Regulation Authority.

ADI and authorised NOHC have their respective meanings given in section 5 of the Act.

Schedule
Prudential Standard APS 111 Capital Adequacy: Measurement of Capital comprises the document commencing on the following page.

Prudential Standard APS 111

Capital Adequacy: Measurement of Capital
Objectives and key requirements of this Prudential Standard
This Prudential Standard sets out the characteristics that an instrument must have to qualify as Regulatory Capital for an authorised deposit-taking institution and the various regulatory adjustments to be made to determine total Regulatory Capital on both a Level 1 and Level 2 basis.
The ultimate responsibility for ensuring that an authorised deposit-taking institution's Regulatory Capital meets the requirements of this Prudential Standard rests with its Board of directors.
The key requirements of this Prudential Standard are that an authorised deposit-taking institution must:
     * include in the appropriate category of Regulatory Capital (i.e. Common Equity Tier 1 Capital, Additional Tier 1 Capital or Tier 2 Capital) only those capital instruments that meet the detailed criteria for that category;
     * ensure all Regulatory Capital instruments are capable of bearing loss on either a 'going-concern' basis (Tier 1 Capital) or a 'gone-concern' basis (Tier 2 Capital); and
     * make certain regulatory adjustments to capital, mainly from Common Equity Tier 1 Capital, to determine total Regulatory Capital.

Table of Contents
Authority
Application
Adjustments and exclusions
Previous exercise of discretion
Interpretation
Definitions
Regulatory Capital
Application of fair values
Common Equity Tier 1 Capital
Additional Tier 1 Capital
Tier 2 Capital
Additional Tier 1 Capital or Tier 2 Capital issued overseas by ADIs or subsidiaries
Intra-group capital transactions
Holding of capital instruments in group members by other group members
Attachment A - Use of Fair Values
Attachment B - Criteria for classification as paid-up ordinary shares
Attachment C - Minority interest and other capital issued out of fully consolidated subsidiaries and is held by third parties