Document ID: chunk:federal_register_of_legislation:F2024L01073:front:0:p21
Version: federal_register_of_legislation:F2024L01073
Segment Type: other
Provision Reference: 
Character Range: 55507–58939

a risk weight of 150 per cent to credit exposures originated through a third party, where the ADI:
         1.           does not undertake the credit assessment and approval of the underlying borrower under its own credit risk policies and processes;
         2.           is unable to administer the workout or default processes; and
         3.           does not have direct recourse to the third party or underlying borrower in the event of default.
    The risk weight prescribed in this paragraph must be applied to all such arrangements irrespective of the characterisation of the third party or underlying borrower.

Other exposures
 1.          An ADI must apply the risk weights in Table 16 to all other exposures that are not property exposures or included within one of the other asset classes specified in this Attachment.

 1.         Risk weights for other exposures
                                                                                                                                                                                       Risk weight (%)
Cash owned and held at the ADI or in transit                                                                                                                                           0
Gold bullion held at the ADI or held in another ADI on an allocated basis, to the extent the gold bullion assets are backed by gold bullion liabilities                                0
Cash items in the process of collection (e.g. cheques, draft and other items drawn on banks that are payable immediately upon presentation and that are in the process of collection)  20
Investments in premises, plant and equipment, and all other fixed assets                                                                                                               100
All other exposures not specified elsewhere                                                                                                                                            100

Risk weight multiplier for certain exposures with currency mismatch
 1.          For exposures originated after 1 January 2023, an ADI must apply a 1.5 times multiplier to the applicable risk weight for any unhedged retail or residential property exposure to individuals, where the lending currency differs from the currency of the borrower's source of income.
 2.          An unhedged exposure is an exposure to a borrower that has no natural or financial hedge against the foreign exchange risk resulting from the currency mismatch between the currency of the borrower's income and the currency of the loan. A natural hedge exists where the borrower receives foreign currency income that matches the currency of a given loan. A financial hedge generally includes a legal contract with a financial institution. For the purpose of the application of the multiplier, an ADI may only treat an exposure as hedged where the natural or financial hedge covers at least 90 per cent of the loan repayment amount.

Attachment C – Off-balance sheet commitments
 1.              A commitment is any arrangement that has been offered by the ADI and accepted by the borrower to extend credit, purchase assets or issue credit substitutes. It includes SFTs.
 1.              A commitment includes any arrangement that can be unconditionally cancelled by the ADI at any time without prior notice to the borrower. It also includes any