Document ID: chunk:federal_register_of_legislation:F2024L01074:body:0:p64
Version: federal_register_of_legislation:F2024L01074
Segment Type: other
Provision Reference: 
Character Range: 203883–208022

including ability to manage the logistic process  Extensive experience with the type of transaction in question. Strong record of operating success and cost efficiency.     Sufficient experience with the type of transaction in question. Above average record of operating success and cost efficiency.  Limited experience with the type of transaction in question. Average record of operating success and cost efficiency.                                                                                     Limited or uncertain track record in general. Volatile costs and profits.
Trading controls and hedging policies                           Strong standards for counterparty selection, hedging and monitoring.                                                       Adequate standards for counterparty selection, hedging and monitoring.                                                          Adequate standards for counterparty selection, hedging and monitoring. Past deals have experienced no or minor problems.                                                                                  Weak standards for counterparty selection, hedging and monitoring. Trader has experienced significant losses on past deals.
Quality of financial disclosure                                 Excellent.                                                                                                                 Good.                                                                                                                           Satisfactory.                                                                                                                                                                                             Financial disclosure contains some uncertainties or is insufficient.
Security package
Asset control                                                   First perfected security interest provides the lender legal control of the assets at any time if needed.                   First perfected security interest provides the lender legal control of the assets at any time if needed.                        At some point in the process, there is a rupture in the control of the assets by the lender. The rupture is mitigated by knowledge of the trade process or a third party undertaking as the case may be.  Contract leaves room for some risk of losing control over the assets. Recovery could be jeopardised.
Insurance against damages                                       Insurance coverage is strong, including collateral damages with top quality insurance companies.                           Insurance coverage is satisfactory (not including collateral damages) with good quality insurance companies.                    Insurance coverage is fair (not including collateral damages) with acceptable quality insurance companies.                                                                                                Insurance coverage is weak (not including collateral damages) or with weak quality insurance companies.

[1]  Refer to subsection 11AF(2) of the Banking Act.

[2]  For this purpose, a non-standard retail residential mortgage exposure refers to an exposure in the retail residential mortgage sub-asset class (as defined in this Prudential Standard) that is classified as a non-standard loan according to APS 112.
[3]  prescribed New Zealand authority has the meaning given in subsection 5(1) of the Banking Act.
[4]  Improvements to an ADI's rating systems or risk components will not render it non-compliant with this three-year requirement.
[5] This excludes the owner-occupied exposure of the borrower.
[6]  Residual value risk means the risk that an ADI is exposed to potential loss due to the fair value of a leased asset declining below its residual estimate at the inception of the lease.
[7]  For this purpose, the World Bank group comprises the International Bank for Reconstruction and Development, the International Finance Corporation, the Multilateral Investment Guarantee Agency and the International Development Association.
[8]  Refer to paragraph 102 of Attachment D