Document ID: chunk:federal_register_of_legislation:F2022L01563:body:0:p2
Version: federal_register_of_legislation:F2022L01563
Segment Type: other
Provision Reference: 
Character Range: 3126–5963

Standard applies to a non-SFI.
3.             A reference to an ADI in this Prudential Standard is a reference to:
(a)          an ADI on a Level 1 basis; and
(b)          a group of which an ADI is a member on a Level 2 basis.
4.             If an ADI to which this Prudential Standard applies is:
(a)          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
(b)          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.
5.             This Prudential Standard commences on 1 January 2023.

Interpretation
6.             Terms that are defined in Prudential Standard APS 001 Definitions appear in bold the first time they are used in this Prudential Standard.
7.             Where this Prudential Standard provides for APRA to exercise a power or discretion, the power or discretion is to be exercised in writing.
8.             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.

Scope
9.             This Prudential Standard applies to all operations and activities of an ADI.

Adjustments and exclusions
10.         APRA may adjust or exclude a specific prudential requirement in this Prudential Standard in relation to one or more specified ADIs, authorised NOHCs or subsidiaries of an ADI or authorised NOHC.
11.         APRA may require an ADI to reduce its level of operational risk or increase its capital if APRA considers that the ADI's Regulatory Capital for its operational risk exposure is not commensurate with the ADI's operational risk profile.

Previous exercise of discretion
12.         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.

Calculation of operational risk regulatory capital
13.         An ADI must calculate its operational risk capital charge as 12 per cent of its business indicator (BI), plus:
(a)          if the BI exceeds $1.5 billion, then 3 per cent of the amount by which the BI exceeds $1.5 billion, plus
(b)          if the BI exceeds $45 billion, then 3 per cent of the amount by which the BI exceeds $45 billion.

Calculation of the business indicator
14.         An ADI must calculate its BI as set out in paragraphs 15 to 22 of this Prudential Standard.
15.         The BI is calculated as follows:
where:
interest, leases and dividend component (ILDC) = the lesser of