Document ID: chunk:federal_register_of_legislation:F2024L01074:body:0:p12
Version: federal_register_of_legislation:F2024L01074
Segment Type: other
Provision Reference: 
Character Range: 31425–34306

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 an IRB approach across all material asset classes and business units at the same time, APRA may approve a phased roll-out of an IRB approach by the ADI. A phased roll-out is where the ADI, in accordance with a specified timetable:
        1.           adopts an IRB approach across asset classes within a particular business unit;
        2.           adopts an IRB approach across business units in the Level 2 group;
        3.           moves from the FIRB approach to the AIRB approach, where the use of the AIRB approach is permitted; and
        4.           moves from the supervisory slotting approach to the FIRB or AIRB approach for IPRE.
    However, where the ADI adopts an IRB approach for an asset class or sub-asset class within a particular business unit, it must apply that IRB approach to all exposures in that asset class or sub-asset class within that business unit.
 1.          An ADI that has received approval to adopt a phased roll-out of an IRB approach must have an implementation plan in place that specifies the extent and timing of roll-out of the IRB approach across all significant asset classes or sub-asset classes and business units.
 2.          During the roll-out period:
        1.           a significant portion (at APRA's discretion) of any expected Regulatory Capital benefit from initial IRB approval may only become available after obtaining final approval. APRA may vary this percentage during the period from initial to final approval to reflect APRA's assessment of the ADI's ability to progress to final approval; and
        2.           no capital relief will be granted for intra-group transactions that reduce an ADI's aggregate capital requirement by transferring credit risk among entities on the standardised approach to credit risk, FIRB approach and AIRB approach. This includes, but is not limited to, asset sales and cross-guarantees.

Permanent partial use
 1.          APRA will approve permanent partial use of an IRB approach only in exceptional circumstances. An ADI seeking such approval must be able to demonstrate that the relevant business activities to which an IRB approach does not apply are immaterial in terms of size and perceived risk profile.

Ongoing requirements
 1.          An ADI that has obtained IRB approval must seek prior approval from APRA where it intends to make:
        1.           changes to its rating systems that will result in a material change in RWA for a given type of exposure; or
        2.           a significant change to its modelling assumptions.
 2.          An ADI that has obtained IRB approval must continue to employ that IRB approach on an