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Banking (prudential standard) determination No. 7 of 2020

Prudential Standard APS 222 Associations with Related Entities

Banking Act 1959

I, John Lonsdale, delegate of APRA:

(a)                under subsection 11AF(3) of the Banking Act 1959 (the Act) REVOKE Banking (prudential standard) determination No. 9 of 2014, including Prudential Standard APS 222 Associations with Related Entities, made under that Determination; and

(b)               under subsection 11AF(1) of the Act DETERMINE Prudential Standard APS 222 Associations with Related Entities, in the form set out in the Schedule, which applies to all ADIs to the extent provided in paragraphs 2 to 3 of the prudential standard.

This instrument commences on 1 January 2022.

Dated: 8 December 2020

[Signed]

John Lonsdale
Deputy Chair

Interpretation
In this Determination:

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

APRA means the Australian Prudential Regulation Authority.
Schedule

Prudential Standard APS 222 Associations with Related Entities comprises the document commencing on the following page.

Prudential Standard APS 222

Associations with Related Entities
Objectives and key requirements of this Prudential Standard
The objective of this Prudential Standard is that authorised deposit-taking institutions identify, monitor and control contagion risks arising from their associations and dealings with related entities and those creating step-in risk.
The key requirements of this Prudential Standard are that an authorised deposit-taking institution must:
     * have a Board-approved policy that governs its associations and dealings with its related entities;
     * identify, monitor, manage and control potential contagion risk between the authorised deposit-taking institution and its related entities and step-in risk entities;
     * meet minimum requirements with respect to dealings with related entities and step-in risk entities which may give rise to prudential concerns; and
     * maintain exposures to related entities within limits.

Table of Contents
Authority
Application
Interpretation
Definitions
Adjustments and exclusions
Previous exercise of discretion
The role of the Board
Control of risks arising from related entities
Provision of support
Group badging and disclosures
Participation in group operations
Limits on exposures to related entities
Measuring exposures to related entities
Prior notification requirements
Notification requirements
Approval requirements
Attachment A — Step-in risk
Attachment B — Funds management
Attachment C — Extended Licensed Entity

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

Application
2.             This Prudential Standard applies to all authorised deposit-taking institutions (ADIs), on a Level 1 basis, except purchased payment facility providers (PPF providers), subject to paragraph 3 of this Prudential Standard.
3.             A foreign ADI is only required to comply with the requirements in paragraphs 23 to 28 of this Prudential Standard.
4.             This Prudential Standard commences on 1 January 2022.

Interpretation
5.             Terms that are defined in Prudential Standard APS 001 Definitions (APS 001)