Document ID: chunk:federal_register_of_legislation:F2020L01591:body:0:p7
Version: federal_register_of_legislation:F2020L01591
Segment Type: other
Provision Reference: 
Character Range: 16228–19100

the ADI as a stand-alone entity;
(b)          be satisfied that any exposures generated are addressed by the ADI's policies and procedures on participating in group operations;
(c)          ensure dealings with other parties arising from participation in group operations are appropriately documented in written service agreements;[5]
(d)          ensure there is a clear documented obligation for a service provider to comply with a direction given by APRA in relation to the operations of the ADI; and
(e)          ensure such operations are not likely to lead to confusion for customers about the respective roles and responsibilities of the ADI and the group member.

Limits on exposures to related entities
29.         The exposures of an ADI to its related entities must not exceed the following limits:[6]
(a)          related ADIs or overseas based equivalents:
(i)            exposure to an individual related ADI or overseas based equivalent – 25 per cent of an ADI's Tier 1 Capital on a Level 1 basis; and
(ii)         aggregate exposure to all related ADIs and overseas based equivalents – 75 per cent of  an ADI's Tier 1 Capital on a Level 1 basis; and
(b)          other related entities:
(i)            exposure to an individual regulated related entity (other than a related ADI or related overseas-based equivalent) – 25 per cent of an ADI's Tier 1 Capital on a Level 1 basis;
(ii)         exposure to an individual unregulated related entity – 15 per cent of an ADI's Tier 1 Capital on a Level 1 basis; and
(iii)       aggregate exposure to all related entities (other than related ADIs and related overseas-based equivalents) – 35 per cent of an ADI's Tier 1 Capital on a Level 1 basis.
30.         An ADI's exposure to an ELE subsidiary is not subject to the limits in paragraph 29 of this Prudential Standard or requirements in Prudential Standard APS 111 Capital Adequacy: Measurement of Capital (APS 111) relating to the treatment of investments in and capital support provided to an ADI's subsidiaries.[7]
31.         An ADI must meet the requirements in relation to its ELE subsidiaries as set out in Attachment C to this Prudential Standard.
32.         An ADI's exposures to the foreign parent of the ADI, the foreign parent's overseas based subsidiaries and their directly owned non-ADI entities operating in Australia are required to be within the limits in Prudential Standard APS 221 Large Exposures (APS 221).
33.         Notwithstanding paragraph 29 of this Prudential Standard, APRA may set specific limits in relation to an ADI's exposure to one or more related entities having regard to the ADI's individual circumstances.

Measuring exposures to related entities
34.         An ADI's exposure to a related entity is the aggregate of all claims, commitments and contingent liabilities arising from on- and off-balance sheet transactions