Document ID: chunk:federal_register_of_legislation:F2022L01577:body:0:p6
Version: federal_register_of_legislation:F2022L01577
Segment Type: other
Provision Reference: 
Character Range: 14221–17170

with the other counterparty;
(b)          one counterparty has fully or partly guaranteed the exposure of the other counterparty, or is liable by other means, and the exposure is significant, such that the guarantor is likely to default if a claim occurs;
(c)          a significant part of a counterparty's business is transacted with the other counterparty, which cannot be easily replaced by business from other customers within a reasonable time period;
(d)          the expected source of funds to repay the loans of both counterparties is the same and neither counterparty has another independent source of income from which the loans may be fully repaid;
(e)          it is likely that the financial difficulties of one counterparty would cause difficulties for the other counterparty in terms of full and timely repayment of liabilities;
(f)           the insolvency or default of one counterparty is likely to be associated with the insolvency or default of the other counterparty; or
(g)          the counterparties rely on the same source for the majority of their funding and, in the event of the common funds provider's default, it is expected that an alternative funds provider could not be found.
25.         For the purposes of paragraph 22 and 24 of this Prudential Standard, a government-related entity is not required to be treated as a connected counterparty with:
(a)          its related government or central bank; or
(b)          other government-related entities that are related to the same government or central bank.
26.         An ADI is not required to include a counterparty in a group of connected counterparties under paragraph 24 of this Prudential Standard if the ADI is satisfied that the counterparty is able to overcome financial difficulties (including as a result of a default by other counterparties in the group) by finding alternative business partners or funding sources within a reasonable time period.
27.         Exposures to central counterparties (CCPs) that are specifically related to clearing activities may be excluded when measuring exposures to a group of connected counterparties.
28.         An ADI must review the reasons for not treating certain counterparties (including structured vehicles and third parties which contribute additional risk factors) as a group of connected counterparties in a timely manner.
29.         APRA may require an ADI to treat counterparties as a group of connected counterparties if in APRA's view they meet the criteria in paragraph 21 of this Prudential Standard.

Large exposure limits
30.         The aggregate large exposures of an ADI to a counterparty or a group of connected counterparties must not exceed 25 per cent of the ADI's Tier 1 Capital, except:
(a)          exposures to foreign governments or central banks that receive a zero per cent risk-weight in accordance with Attachment B of Prudential Standard APS 112 Capital Adequacy: Standardised