Document ID: chunk:federal_register_of_legislation:F2024L01518:body:0:p2
Version: federal_register_of_legislation:F2024L01518
Segment Type: other
Provision Reference: 
Character Range: 3728–6744

(Banking Act).

Application
 1.              This Prudential Standard applies to all authorised deposit-taking institutions (ADIs) with the exception of:
         1.           foreign ADIs; or
         2.           purchased payment facility providers.
 2.              A reference to an ADI in this Prudential Standard, unless otherwise indicated, is a reference to:
         1.           an ADI on a Level 1 basis; and
         2.           a group of which an ADI is a member on a Level 2 basis.
 3.              If an ADI to which this Prudential Standard applies is:
         1.           the holding company for a group, the ADI must ensure that the requirements in this Prudential Standard are met on a Level 2 basis, where applicable; or
         2.           a subsidiary of an authorised non-operating holding company (authorised NOHC), the authorised NOHC must ensure that the requirements in this Prudential Standard are met on a Level 2 basis, where applicable.
 4.              This Prudential Standard commences on 1 January 2025.

Interpretation
 1.              Terms that are defined in Prudential Standard CPS 001 Defined terms appear in bold the first time they are used in this Prudential Standard.
 2.              Where this Prudential Standard provides for APRA to exercise a power or discretion, this power or discretion will be exercised in writing.
 3.              In this Prudential Standard, unless the contrary intention appears, a reference to an Act, Regulations, Prudential Standard or Australian Accounting Standards is a reference to the instrument as in force from time to time.

Definitions
 1.              The following definitions are used in this Prudential Standard:
         1.           IRB ADI – means an ADI which has been approved by APRA to use the internal ratings-based (IRB) approach to credit risk;
         2.           standardised ADI – means an ADI which has not been approved by APRA to use the internal ratings-based approach to credit risk.

Adjustments and exclusions
 1.          APRA may adjust or exclude a specific prudential requirement in this Prudential Standard in relation to one or more ADIs or authorised NOHCs.[1]

Previous exercise of discretion
 1.          An ADI must contact APRA if it seeks to place reliance, for the purposes of complying with this Prudential Standard, on a previous exemption or other exercise of discretion by APRA under a previous version of this Prudential Standard.

Responsibility for capital management
 1.          The Board of an ADI must ensure that the ADI maintains a level and quality of capital commensurate with the type, amount and concentration of risks to which the ADI is exposed from its activities.[2] In doing so, the Board must have regard to any prospective changes in the ADI's risk profile and capital holdings.
 2.          An ADI that is a member of a group may be exposed to risks, including reputational and contagion risk, through its association with other members of the group. Problems