Document ID: chunk:federal_register_of_legislation:F2022L01566:body:0:p1
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Banking (prudential standard) determination No. 11 of 2022

Prudential Standard APS 121 Covered Bonds

Banking Act 1959

I, Renée Roberts, a delegate of APRA:

    (a)               under subsection 11AF(3) of the Banking Act 1959 (the Act) REVOKE Banking (prudential standard) determination No. 1 of 2019, including Prudential Standard APS 121 Covered Bonds, made under that determination; and

    (b)               under subsection 11AF(1) of the Act DETERMINE Prudential Standard APS 121 Covered Bonds, in the form set out in the schedule, which applies to all ADIs to the extent provided in paragraph 2 of the prudential standard.

This instrument commences on 1 January 2023.

Dated: 1 December 2022

[Signed]

Renée Roberts
Executive Director
Policy and Advice Division

Interpretation

      In this instrument:

APRA means the Australian Prudential Regulation Authority.

ADI has the meaning given in section 5 of the Act.

Schedule

Prudential Standard APS 121 Covered Bonds comprises the document commencing on the following page.

Prudential Standard APS 121

Covered bonds
Objectives and key requirements of this Prudential Standard
This Prudential Standard sets out requirements for the issuing of covered bonds by authorised deposit‑taking institutions (ADIs).
Ultimately, the Board of an ADI is responsible for ensuring that the ADI adopts prudent practices when issuing covered bonds and managing the risks associated with exposure to a covered bond special purpose vehicle.
The key requirements of this Prudential Standard are that an authorised deposit-taking institution must:
   * adopt policies and procedures to manage risks relating to its issuance of covered bonds; and
   * apply an appropriate capital treatment to exposures associated with covered bond issuance.
This Prudential Standard should be read in conjunction with Division 3A of Part II of the Banking Act 1959, which sets out the legislative framework for covered bonds.

Authority

     1. This Prudential Standard is made under section 11AF of the Banking Act 1959 (Banking Act).

Application and commencement

    2.             This Prudential Standard applies to all authorised deposit-taking institutions (ADIs), other than a foreign ADI.

    3.             This Prudential Standard commences on 1 January 2023.

Interpretation

    4.             Terms that are defined in Prudential Standard APS 001 Definitions appear in bold the first time they are used in this Prudential Standard.

    5.             Where this Prudential Standard provides for APRA to exercise a power or discretion, this power or discretion is to be exercised in writing.

    6.             In this Prudential Standard, unless the contrary intention appears, a reference to an Act, Regulations, Prudential Standard or Reporting Standard is a reference to the Act, Regulations, Prudential Standard or Reporting Standard as in force from time to time.[1]

Scope

    7.             This Prudential Standard does not apply to a bond, note or other debenture, liabilities in relation to which are secured wholly by assets that are not in