Document ID: chunk:federal_register_of_legislation:F2022L01577:body:0:p7
Version: federal_register_of_legislation:F2022L01577
Segment Type: other
Provision Reference: 
Character Range: 16913–19856

not exceed 25 per cent of the ADI's Tier 1 Capital, except:
(a)          exposures to foreign governments or central banks that receive a zero per cent risk-weight in accordance with Attachment B of Prudential Standard APS 112 Capital Adequacy: Standardised Approach to Credit Risk (APS 112), which must not exceed 50 per cent of the ADI's Tier 1 Capital;[4] and
(b)          where the ADI has been determined by APRA to be a domestic systemically important bank (D-SIB), exposures to any other ADI determined by APRA to be a D-SIB must not exceed 20 per cent of the ADI's Tier 1 Capital.[5]
These limits apply to an ADI's large exposures at both Level 1 and Level 2 net of eligible CRM techniques and excluded exposures under paragraph 18 of this Prudential Standard. These limits do not apply to the exposures of an ADI to its related entities.[6]
31.         Notwithstanding paragraph 30 of this Prudential Standard, APRA may set specific limits on an ADI's exposures to particular counterparties, groups of connected counterparties, industry sectors, countries or asset classes, including property holdings and any other investments, having regard to the ADI's individual circumstances.

Measuring large exposure values
32.         An ADI must measure exposure values in accordance with Attachment A of this Prudential Standard. In measuring large exposures, an ADI must include all on-balance sheet exposures and off-balance sheet exposures in both the banking book and trading book and instruments that would give rise to counterparty credit risk (CCR) under APS 180.
33.         APRA may determine the exposure value of a particular on-balance sheet or off-balance sheet exposure of an ADI if APRA considers that the ADI has not appropriately assessed the exposure.

Prior notification requirements
34.         An ADI must notify APRA prior to committing to any proposed large exposures to non-government and non-ADI counterparties, subject to paragraph 35 of this Prudential Standard.
35.         APRA may determine that an ADI is not required to notify APRA about proposed exposures that are below a specified threshold, having regard to the robustness of the ADI's credit risk management framework.

Approval requirements
36.         An ADI must obtain approval from APRA prior to undertaking any proposed exposures which would exceed the large exposure limits under paragraph 30 of this Prudential Standard or any specific limits determined under paragraph 31 of this Prudential Standard. Such approval will only be granted on an exceptions basis taking into consideration the individual circumstances of the ADI and the ADI's assessment of:
(a)          the concentration risks involved with exceeding the large exposure limits and why the proposed exposures will not unreasonably expose the ADI to excessive risk; and
(b)          how the proposed exposures are consistent with its large exposures and risk concentration policies.