Document ID: chunk:federal_register_of_legislation:F2024L01074:body:0:p11
Version: federal_register_of_legislation:F2024L01074
Segment Type: other
Provision Reference: 
Character Range: 28843–31652

retail exposures consistently over time. This requires that such exposures:
                1.             are originated in a similar manner to other retail exposures; and
                2.          must not be managed individually in a way that is comparable to an exposure in the corporate IRB asset class but rather as part of a portfolio segment or pool of exposures with similar risk characteristics for the purposes of risk assessment and quantification. This does not preclude these exposures from being managed individually at some stages of the risk management process.

Other retail
 1.          The other retail IRB sub-asset class includes all other retail exposures.

IRB approval
 1.          APRA may approve an ADI to use an IRB approach for Regulatory Capital purposes. APRA may impose conditions on the ADI's use of an IRB approach for Regulatory Capital purposes.
 2.          An ADI must obtain prior approval from APRA to use an IRB approach for Regulatory Capital purposes. Where APRA approves the use of an IRB approach, it will specify how the IRB approach applies in relation to the ADI.

Initial approval
 1.          In its initial application to use an IRB approach, an ADI must seek IRB approval for all material asset classes and business units of the ADI. The ADI must demonstrate that it complies with the minimum requirements of this Prudential Standard for the relevant IRB asset classes or sub-asset classes, and has been using rating systems and risk components that are broadly in line with the requirements of this Prudential Standard for at least three years prior to an IRB approval being given.[4]
 2.          In its initial application to use an IRB approach, an ADI must, unless determined otherwise by APRA, also seek approval to use an internal risk measurement model for the purpose of determining the Regulatory Capital requirement for interest rate risk in the banking book as set out in Prudential Standard APS 117 Capital Adequacy: Interest Rate Risk in the Banking Book.
 3.          In addition to credit exposures for which an ADI must use the standardised approach to credit risk, APRA may permit the ADI to use a combination of an IRB approach and the standardised approach for Regulatory Capital purposes. This approach is referred to as 'partial use'. Partial use may apply on a temporary or permanent basis.
 4.          An ADI seeking approval to adopt partial use must provide APRA with information on any business activities for which the ADI proposes to use the standardised approach to credit risk. This information must be provided both at the time of the ADI's initial application for the use of an IRB approach and subsequent to the ADI obtaining IRB approval.

Phased roll-out
 1.          Where it is not practical for an ADI to implement