Financial Sector (Collection of Data) (reporting standard) determination No. 11 of 2006 Reporting Standard ARS 222.0 Exposures to Related Entities (Cth)
Financial Sector (Collection of Data) (reporting standard) determination No. 11 of 2006
Reporting standard ARS 222.0 Exposures to Related Entities
Financial Sector (Collection of Data) Act 2001
I, Charles Watts Littrell, a delegate of APRA, under paragraph 13(1)(a) of the Financial Sector (Collection of Data) Act 2001 (the Act) and subsection 33(3) of the Acts Interpretation Act 1901:
REVOKE the Reporting Standard ARS 222.0 (2005) Exposures to Related Entities; and
DETERMINE the Reporting standard ARS 222.0 Exposures to Related Entities in the form set out in the attached Schedule, which applies to the financial sector entities referred to in paragraph 2 of the reporting standard.
Under section 15 of the Act, I DECLARE that the reporting standard shall begin to apply to those financial sector entities on the later of 1 July 2006 and the date of registration on the Federal Register of Legislative Instruments.
Dated 26 June 2006
[signed]
Charles Littrell
Executive General Manager
Policy, Research and Statistics
APRA
Interpretation
In this Determination
APRA means the Australian Prudential Regulation Authority.
Schedule
Reporting standard ARS 222.0 Exposures to Related Entities comprises 30 pages commencing on the next page.
Reporting Standard ARS 222.0
Exposures to Related Entities
Objective of this reporting standard
This reporting standard is made under section 13 of the Financial Sector (Collection of Data) Act 2001. It requires all authorised deposit-taking institutions, including foreign authorised deposit-taking institutions operating in Australia through branch operations, to report to APRA, generally on a quarterly basis, in relation to their exposures to related entities.
This reporting standard outlines the overall requirements for the provision of relevant information to APRA. It should be read in conjunction with Form ARF 222.0 Exposures to Related Entities designated for a ‘Licensed ADI/Extended Licensed Entity (ELE)’ and the associated instructions (each of which is attached and forms part of this reporting standard).
Purpose
Data collected in Form ARF 222.0 Exposures to Related Entities (Form ARF 222.0) is used by APRA for the purpose of prudential supervision. It may also be used by the Reserve Bank of Australia.
Application
This reporting standard applies to all authorised deposit-taking institutions (ADIs).
Information required
A foreign ADI (including a foreign ADI that is a specialist credit card institution operating through a branch in Australia) must complete and provide to APRA, for the Australian branch, Part C of Form ARF 222.0 designated for a ‘Licensed ADI/ELE’, for each reporting period.
All other ADIs must complete and provide to APRA Parts A and B of Form ARF 222.0 designated for a ‘Licensed ADI/ELE’ for each reporting period.
Forms and method of submission
The information required by this reporting standard must be given to APRA either:
(a)in electronic form, using one of the electronic submission mechanisms provided by the ‘Direct to APRA’ (also known as ‘D2A’) application; or
(b)manually completed on paper, which must be faxed or mailed to APRA’s head office.
Note: the Direct to APRA application software and paper forms may be obtained from APRA.
Reporting periods and due dates
Subject to paragraph 7, an ADI must provide the information required by this reporting standard for each quarter based on the financial year (within the meaning of the Corporations Act 2001) of the ADI.
APRA may, by notice in writing, change the reporting periods, or specified reporting periods, for a particular ADI, to require it to provide the information required by this reporting standard more frequently, or less frequently, having regard to:
(a)the particular circumstances of the ADI;
(b)the extent to which the information is required for the purposes of the prudential supervision of the ADI; and
(c)the requirements of the Reserve Bank of Australia or the Australian Bureau of Statistics.
The information required by this reporting standard must be provided to APRA by the following times:
(a)in the case of information required by paragraphs 3 and 4 from a locally-incorporated bank, foreign ADI (other than a specialist credit card institution) or locally-incorporated special service provider – 20 business days after the end of the reporting period to which the information relates; and
(b)in the case of information required by paragraphs 3 and 4 from a locally- incorporated credit union, locally-incorporated building society, specialist credit card institution (whether locally-incorporated or not) or Cairns Penny Savings & Loans Limited – 15 business days after the end of the reporting period to which the information relates.
APRA may grant an ADI an extension of a due date in writing, in which case the new due date for the provision of the information will be the date on the notice of extension.
Quality control
The information provided by an ADI under this reporting standard must be the product of processes and controls that have been reviewed and tested by the external auditor of the ADI. AGS 1008 ‘Audit Implications of Prudential Reporting Requirements for Authorised Deposit-taking Institutions’, issued by the Auditing and Assurance Standards Board provides guidance on the scope and nature of the review and testing required from external auditors. This review and testing must be done on an annual basis or more frequently if necessary to enable the external auditor to form an opinion on the accuracy and reliability of the data.
All information provided by an ADI under this reporting standard must be subject to processes and controls developed by the ADI for the internal review and authorisation of that information. It is the responsibility of the board and senior management of the ADI to ensure that an appropriate set of policies and procedures for the authorisation of data submitted to APRA is in place.
Authorisation
If an ADI submits information under this reporting standard using the ‘Direct to APRA’ software, it will be necessary for an officer of the ADI to digitally sign, authorise and encrypt the relevant data. For this purpose, APRA’s certificate authority will issue ‘digital certificates’, for use with the software, to officers of the ADI who have authority from the ADI to transmit the data to APRA.
If information under this reporting standard is provided in paper form, it must be signed on the front page of the relevant completed form by either:
(a)the Principal Executive Officer of the ADI; or
(b)the Chief Financial Officer of the ADI (whatever his or her official title may be).
Minor alterations to forms and instructions
APRA may make minor variations to:
(a)a form that is part of this reporting standard, and the instructions to such a form, to correct technical, programming or logical errors, inconsistencies or anomalies; or
(b)the instructions to a form, to clarify their application to the form
without changing any substantive requirement in the form or instructions.
If APRA makes such a variation it must notify in writing each ADI that is required to report under this reporting standard.
Transitional
An ADI must report under the old reporting standard in respect of a transitional reporting period. For these purposes:
old reporting standard means the reporting standard revoked in the determination making this reporting standard (being the reporting standard which this reporting standard replaces).
transitional reporting period means a reporting period under the old reporting standard:
(a)which ended before the date of revocation of the old reporting standard; and
(b)in relation to which the ADI was required, under the old reporting standard, to report by a date on or after the date of revocation of the old reporting standard.
Interpretation - classifications of ADIs
In this reporting standard:
ADI means an authorised deposit-taking institution within the meaning of the Banking Act 1959.
ADI list means the attached ADI list.
building society means an ADI whose name appears under the heading ‘Building Societies’ in the ADI list.
credit union means an ADI whose name appears under the heading ‘Credit Unions’ in the ADI list.
Extended Licensed Entity (ELE) means, in relation to a locally-incorporated ADI:
(a)the ADI; and
(b)all subsidiaries of the ADI that have been approved under AGN 222.1 Extended Licensed Entity for the purposes of APS 222 Associations with Related Entities (each made under s 11AF of the Banking Act 1959)
taken together and treated as if they formed a single entity for reporting purposes.
foreign ADI means an ADI that is not incorporated in Australia.
locally-incorporated means incorporated in Australia;
locally-incorporated bank means an ADI incorporated in Australia whose name appears under the heading ‘Australian-owned Banks’ or ‘Foreign Subsidiary Banks’ in the ADI list.
special service provider means an ADI whose name appears under the heading ‘Other ADIs’ in the ADI list (other than the Cairns Penny Savings & Loans Limited).
specialist credit card institution means an ADI whose name appears under the heading ‘Specialist Credit Card Institutions (SCCIs)’ in the ADI list.
If an ADI is not in the ADI list, then:
(a)if the ADI assumes or uses the word ‘bank’ in relation to its financial business, and is locally-incorporated, it is taken to be a locally-incorporated bank for the purposes of this reporting standard;
(b)if the ADI assumes or uses the expression ‘building society’ in relation to its financial business, and is locally-incorporated, it is taken to be a locally-incorporated building society for the purposes of this reporting standard;
(c)if the ADI assumes or uses the expression ‘credit union’, ‘credit society’ or ‘credit co-operative’ in relation to its financial business, and is locally-incorporated, it is taken to be a locally-incorporated credit union for the purposes of this reporting standard; and
(d)if the ADI engages in credit card issuing or credit card acquiring, or both, and does not otherwise carry on banking business within the meaning of section 5 of the Banking Act 1959, it is taken to be a specialist credit card institution for the purposes of this reporting standard.
APRA may in writing determine that an ADI is taken to be a locally-incorporated bank, locally-incorporated building society, locally-incorporated credit union, foreign ADI, special service provider or specialist credit card institution for the purposes of this standard (even if, under paragraph 17 or 18, it comes within a different classification).
Interpretation - other definitions
In this reporting standard:
business days means ordinary business days, exclusive of Saturdays, Sundays and public holidays.
Principal Executive Officer means the principal executive officer of the ADI for the time being, by whatever name called, and whether or not he or she is a member of the governing board of the entity.
reporting period means a reporting period under paragraph 6 or, if applicable, paragraph 7.
The ADI list
Australian-owned Banks
Adelaide Bank Limited
AMP Bank Limited
Australia and New Zealand Banking Group Limited
Bank of Queensland Limited
Bendigo Bank Limited
Commonwealth Bank of Australia
Commonwealth Development Bank of Australia Limited (a subsidiary of Commonwealth Bank of Australia)
Elders Rural Bank Limited
Macquarie Bank Limited
Members Equity Bank Pty Limited
National Australia Bank Limited
St George Bank Limited
Suncorp-Metway Limited
Westpac Banking Corporation
Foreign Subsidiary Banks
Arab Bank Australia Limited
Bank of China (Australia) Limited
Bank of Cyprus Australia Pty Limited
BankWest (the trading name of Bank of Western Australia Limited, a foreign subsidiary bank following its sale to Bank of Scotland in December 1995)
Citigroup Pty Limited
HSBC Bank Australia Limited
ING Bank (Australia) Limited
Investec Bank (Australia) Limited
Laiki Bank (Australia) Limited
NM Rothschild & Sons (Australia) Limited
Rabobank Australia Limited (a subsidiary of Rabobank Nederland from October 1994)
Branches of Foreign Banks
ABN AMRO Bank N.V.
Bank of America, National Association
Bank of China (subject to depositor protection provisions of the Banking Act 1959)
Bank of Tokyo-Mitsubishi UFJ, Ltd
Barclays Capital (the trading name of Barclays Bank plc)
BNP Paribas
Citibank N.A.
Credit Suisse
Deutsche Bank AG
HBOS Treasury Services plc
HSBC Bank plc
ING Bank NV
JPMorgan Chase Bank, National Association
Mizuho Corporate Bank, Ltd
Oversea-Chinese Banking Corporation Limited
Rabobank Nederland (the trading name of Co-operative Central Raiffeisen-Boerenleenbank B.A.)
Royal Bank of Canada
Société Générale
Standard Chartered Bank
State Bank of India
State Street Bank and Trust Company
The International Commercial Bank of China
The Royal Bank of Scotland Plc
The Toronto-Dominion Bank
Taiwan Business Bank
UBS AG
United Overseas Bank Limited
WestLB AG
Building Societies
ABS Building Society Ltd
B & E Ltd
Greater Building Society Ltd
Heritage Building Society Limited
Home Building Society Ltd
Hume Building Society Ltd
IMB Ltd
Lifeplan Australia Building Society Limited
Mackay Permanent Building Society Ltd
Maitland Mutual Building Society Limited
Newcastle Permanent Building Society Ltd
Pioneer Permanent Building Society Limited
The Rock Building Society Limited
Wide Bay Australia Ltd
Credit Unions
Alliance One Credit Union Ltd
AMP Employees' & Agents Credit Union Limited
Austral Credit Union Limited
Australian Central Credit Union Limited
Australian Country Credit Union Ltd (trading as Reliance Credit Union)
Australian Defence Credit Union Ltd
AWA Credit Union Limited
Bananacoast Community Credit Union Ltd
Bankstown City Credit Union Ltd
Berrima District Credit Union Ltd
Big Sky Credit Union Ltd
Blue Mountains and Riverlands Community Credit Union Ltd
Broadway Credit Union Ltd
Calare Credit Union Ltd
CAPE Credit Union Limited
Capital Credit Union Ltd
Capricornia Credit Union Ltd
Carboy (SA) Credit Union Limited
Central Murray Credit Union Limited
Central West Credit Union Limited
Circle Credit Co-operative Limited
Coastline Credit Union Limited
Collie Miners Credit Union Ltd
Community Alliance Credit Union Limited
Community CPS Australia Limited
Community First Credit Union Limited
Companion Credit Union Limited
Comtax Credit Union Limited
Connect Credit Union of Tasmania Limited
Country First Credit Union Ltd
CPS Credit Union Co-operative (ACT) Limited
Credit Union Australia Ltd
Credit Union Incitec Pivot Limited
Croatian Community Credit Union Limited
CSR and Rinker Employees Credit Union Limited
Dairy Farmers Credit Union Ltd
Defence Force Credit Union Limited
Discovery Credit Union Ltd
Dnister Ukrainian Credit Co-operative Limited
ELCOM Credit Union Ltd
Electricity Credit Union Ltd
Encompass Credit Union Limited
Ericsson Employees Credit Co-operative Limited
Esso Employees' Credit Union Ltd
Eurobodalla Credit Union Ltd
Family First Credit Union Limited
Fire Brigades Employees' Credit Union Limited
Fire Service Credit Union Limited
Firefighters & Affiliates Credit Co-operative Limited
First Option Credit Union Limited
First Pacific Credit Union Limited
Fitzroy & Carlton Community Credit Co-operative Limited
Ford Co-operative Credit Society Limited
Gateway Credit Union Ltd
Geelong & District Credit Co-operative Society Limited
GMH (Employees) Q.W.L. Credit Co-operative Limited
Goldfields Credit Union Ltd
Gosford City Credit Union Ltd
Goulburn Murray Credit Union Co-operative Limited
H.M.C. Staff Credit Union Ltd
Heritage Isle Credit Union Limited
Hibernian Credit Union Limited
Holiday Coast Credit Union Ltd
Horizon Credit Union Ltd
Hoverla Ukrainian Credit Co-operative Ltd
Hunter Mutual Limited
Hunter United Employees' Credit Union Limited
Industries Mutual Credit Union Limited
Intech Credit Union Limited
Island State Credit Union Ltd
Karpaty Ukrainian Credit Union Limited
La Trobe Country Credit Co-operative Limited
La Trobe University Credit Union Co-operative Limited
Laboratories Credit Union Ltd
Latvian Australian Credit Co-operative Society Limited
Lithuanian Co-operative Society (Talka) Limited
Lysaght Credit Union Ltd
MacArthur Credit Union Ltd
Macaulay Community Credit Co-operative Limited
Macquarie Credit Union Limited
Maleny and District Community Credit Union Limited
Manly Warringah Credit Union Ltd
Maritime Workers of Australia Credit Union Ltd
Maroondah Credit Union Ltd
MECU Limited
Melbourne University Credit Union Limited
Memberfirst Credit Union Limited
New England Credit Union Ltd
Newcom Colliery Employees' Credit Union Ltd
Northern Inland Credit Union Ltd
Nova Credit Union Limited
NSW Teachers Credit Union Ltd
Old Gold Credit Union Co-operative Limited
Orana Credit Union Ltd
Orange Credit Union Limited
Phoenix (NSW) Credit Union Ltd
Plenty Credit Co-operative Limited
Police & Nurses Credit Society Limited
Police Association Credit Co-operative Limited
Police Credit Union Limited
Polish Community Credit Union Ltd
Power Credit Union Limited
Powerstate Credit Union Ltd
Pulse Credit Union Limited
Qantas Staff Credit Union Limited
Queensland Community Credit Union Limited
Queensland Country Credit Union Ltd
Queensland Police Credit Union Limited
Queensland Professional Credit Union Ltd
Queensland Teachers' Credit Union Limited
Queenslanders Credit Union Limited
Railways Credit Union Limited
RegionalOne Credit Union Limited
Resources Credit Union Limited
RTA Staff Credit Union Limited
Satisfac Direct Credit Union Limited
Savings and Loans Credit Union (S.A.) Ltd
Security Credit Union Ltd
Select Credit Union Ltd
Service One Credit Union Ltd
SGE Credit Union Limited
Shell Employees' Credit Union Limited
South West Slopes Credit Union Ltd
Southern Cross Credit Union Limited
South-West Credit Union Co-operative Limited
St Mary's Swan Hill Co-operative Credit Society Limited
St Patrick's Mentone Co-operative Credit Society Limited
Statewest Credit Society Limited
Sutherland Credit Union Ltd
Sutherland Shire Council Employees' Credit Union Ltd
Sydney Credit Union Ltd
Tartan Credit Union Ltd
The Broken Hill Community Credit Union Ltd
The Gympie Credit Union Ltd
The Police Department Employees' Credit Union Limited
The Summerland Credit Union Limited
The TAFE and Community Credit Union Limited
The University Credit Society Limited
Traditional Credit Union Limited
TransComm Credit Co-operative Limited
Uni Credit Union Ltd
United Credit Union Limited
Victoria Teachers Credit Union Limited
Wagga Mutual Credit Union Ltd
Warwick Credit Union Ltd
WAW Credit Union Co-operative Limited
Westax Credit Society Ltd
Western City Credit Union Ltd
Woolworths/Safeway Employees' Credit Co-operative Limited
Wyong Council Credit Union Ltd
Yennora Credit Union Ltd
Specialist Credit Card Institutions (SCCIs)
Foreign-owned SCCIs
GE Capital Finance Australia
GE Finance Australasia Pty Ltd
Locally Incorporated SCCIs
MoneySwitch Limited
Other ADIs
These companies are run by industry bodies and provide services (eg payments clearing) to member building societies and credit unions.
Australian Settlements Limited
Credit Union Services Corporation (Australia) Limited
Indue Ltd
One ADI that provides general banking services which does not fall into the other categories.
Cairns Penny Savings & Loans Limited
Authorised Non-Operating Holding Companies
HBOS Australia Pty Ltd
Reporting Form ARF 222.0
Exposures to Related Entities
Instruction Guide
Purpose
This form collects information on an authorised deposit-taking institution’s (ADI’s) exposures to individual counterparties that are related to the ADI.
Information reported on this form is prudentially important, as it will form part of APRA’s monitoring and analysis framework for the ADI and the industry.
Audit requirements
This form is subject to audit review and testing. The scope and nature of audit testing required is outlined in the applicable Audit Guidance Statement issued by the Auditing and Assurance Board of the Australian Accounting Research Foundation.
Reporting entity
This form is to be completed as follows:
foreign ADIs and Specialist Credit Card Institutions (SCCIs) operating through branches in Australia are only required to complete Part C of this form for the Australian branch (i.e. Parts A and B of this form are not applicable); and
all other ADIs (including locally incorporated SCCIs) are required to complete Parts A and B of this form.
Unit of measurement
Banks are asked to complete the form in millions of Australian dollars rounded to one decimal place, and for other non-bank ADIs (including SCCIs), in whole Australian dollars (no decimal place).
Amounts denominated in foreign currency are to be converted to AUD in accordance with AASB 121 The Effects of Changes in Foreign Exchange Rates (AASB 121).
The general requirements of AASB 121 for translation are:
foreign currency monetary items outstanding at the reporting date must be translated at the spot rate at the reporting date;1
1 Monetary items are defined to mean units of currency held and assets and liabilities to be received or paid in a fixed or determinable number of units of currency. Spot rate means the exchange rate for immediate delivery.
foreign currency non-monetary items that are measured at historical cost in a foreign currency must be translated using the exchange rate at the date of the transaction;2
2 Examples of non-monetary items include amounts prepaid for goods and services (e.g. prepaid rent); goodwill; intangible assets; physical assets; and provisions that are to be settled by the delivery of a non-monetary asset.
foreign currency non-monetary items that are measured at fair value will be translated at the exchange rate at the date when fair value was determined.
Transactions arising under foreign currency derivative contracts at the reporting date must be prepared in accordance with AASB 139 Financial Instruments: Recognition and Measurement (AASB 139). However, those foreign currency derivatives that are not within the scope of AASB 139 (e.g. some foreign currency derivatives that are embedded in other contracts) remain within the scope of AASB 121.
For APRA purposes equity items must be translated using the foreign currency exchange rate at the date of investment or acquisition. Post acquisition changes in equity are required to be translated on the date of the movement.
As foreign currency derivatives are measured at fair value, the currency derivative contracts are translated at the spot rate at the reporting date.
Exchange differences should be recognised in profit and loss in the period which they arise. For foreign currency derivatives, the exchange differences would be recognised immediately in profit and loss if the hedging instrument is a fair value hedge. For derivatives used in a cash flow hedge, the exchange differences should be recognised directly in equity.
The ineffective portion of the exchange differences in all hedges would be recognised in profit and loss; and
translation of financial reports of foreign operations.
A foreign operation is defined in AASB 121 as meaning an entity that is a subsidiary, associate, joint venture or branch of a reporting entity, the activities of which are based or conducted in a country or currency other than those of the reporting entity.
·Exchange differences relating to foreign currency monetary items that form part of the net investment of an entity in a foreign operation, must be recognised as a separate component of equity.
·Translation of financial reports should otherwise follow the requirements in AASB 121.
Reporting period
The form is to be completed as at the last day of the stated reporting quarter. Locally incorporated banks, foreign ADIs (other than specialist credit card institutions) and Special Service Providers should submit the completed form to APRA within 20 business days after the end of the relevant reporting quarter. Credit Unions, Cairns Penny Savings & Loans Limited, Building Societies and SCCIs should submit the completed form to APRA within 15 business days after the end of the relevant reporting quarter.
Basis of preparation
For the purposes of this form, unless specifically advised in the ‘Instruction Guide for Specific Items’, ADIs are to report all exposures gross. No netting is to be recognised even if the ADI has in place netting agreements that are in the form of a legally recognised right to net or set off items of assets and liabilities in accordance with AASB 139, AASB 132 Financial Instruments: Disclosure and Presentation and AASB 7 Financial Instruments: Disclosures.
Definitions
This section provides guidance on the interpretation of certain items used in this form.
Licensed ADI
This refers to the operations of the reporting ADI on a stand-alone basis.
Securitisation deconsolidation principle
Except where stated otherwise on this form, reporting entities must treat any securitisation program special purpose vehicles (SPVs) in which the ADI (or a member of its consolidated group) participates in accordance with APRA’s clean sale and separation requirements as non-consolidated independent third parties. As a result, for reporting purposes all assets, liabilities, revenues and expenses of these SPVs must be excluded from the ADI’s reported amounts. Where relevant, report on this form any exposure to or other transaction between the ADI and any such SPV as if such transaction was conducted with an independent third party, regardless of whether the SPV or its assets is consolidated for accounting purposes.
APRA's clean sale and separation requirements are set out in APS 120 Funds Management and Securitisation and related Guidance Notes AGN 120.3 Purchase and Supply of Assets (including Securities Issued by SPVs) and AGN 120.1 Disclosure and Separation. Whenever the clean sale and separation requirements are not met, all the assets, liabilities, revenues and expenses of the SPV are to be consolidated with the ADI’s reported amounts.
Extended Licensed Entity (ELE)
This means, in relation to a locally-incorporated ADI:
(a)the ADI; and
(b)all subsidiaries of the ADI that have been approved under Guidance Note AGN 222.1 Extended Licensed Entity (AGN 222.1) for the purposes of Prudential Standard APS 222 Associations with Related Entities (APS 222) (each made under s 11AF of the Banking Act 1959) taken together and treated as if they formed a single entity for the purposes of measuring the ADI’s exposures to related entities.
Subject to specific requirements, APRA may deem a subsidiary of an ADI (other than an entity regulated by APRA or by a foreign equivalent) to be part of the ADI itself for the purposes of measuring the ADI’s exposures to related entities (refer to APS 222 and AGN 222.1).
Related entities
All entities controlled (whether directly or indirectly) by an ADI (other than subsidiaries that form part of its ELE), or by the ultimate domestic parent of an ADI (including the parent entity itself) represent a “related entity” of an ADI. A “related entity” excludes the foreign parent(s) of an ADI, the foreign parent’s overseas based subsidiaries and their directly owned non-ADI entities operating in Australia3. Where appropriate, APRA may deem that other entities (and their subsidiaries) represent a “related entity” of an ADI.
3 The ADI’s exposures to these entities are to be reported in ARF 221.0 Large Exposures under Part A or Part B memorandum items as appropriate.
Subsidiary
This is defined in accordance with the definition provided in AASB 127 Consolidated and Separate Financial Statements (AASB 127) as “an entity that is controlled by another entity (known as the parent)” unless otherwise instructed by APRA.
Control is defined by AASB 127 as “the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities”.
Parent entity
This is defined by AASB 127 as meaning “an entity that has one or more subsidiaries”.
Exposures
An exposure to an entity is the aggregate of all claims, commitments and contingent liabilities arising from on- and off-balance sheet transactions (in both the banking and trading books) with the entity. This includes equity investment in the entity.
Note: Where credit risk is unequivocally transferred from the entity to another entity by an irrevocable letter of credit or a direct guarantee, the exposure is to be recorded against the other entity.
On-balance sheet exposures
This refers to items of assets that are recognised or recorded on the statement of financial position of the ADI/ELE (as appropriate).
Off-balance sheet exposures
This refers to items of assets or liabilities that are not recognised or recorded on the statement of financial position of the ADI because they do not satisfy the asset or liability accounting recognition requirements. Items that were treated as off-balance sheet items for the purpose of this form, pre-IFRS, will continue to be treated as off-balance sheet items, post-IFRS.
Instruction guide for specific items
The form has the following reporting components:
Part A: 10 Largest exposures to related entities
Part A is to be completed by all locally incorporated banks and locally-incorporated non-bank ADIs (including SCCIs) on a licensed ADI or ELE basis (where applicable). Report in this part on a net basis (explained in detail below) the ADI’s/ELE’s (as appropriate) 10 largest exposures to individual related entities.
The following instructions are applicable to Part A of this form.
Name of entity
Report in column 1 the names of the relevant individual related entities to which the ADI/ELE (as appropriate) has exposures to.
Category
Report in column 2 the category of the related entity reported in column 1 using the following abbreviations:
ADI for related ADIs (including overseas based equivalents);
OR for other regulated related entities (i.e. any related entity other than an ADI or overseas based equivalent directly regulated by APRA or by a foreign equivalent); or
UR for unregulated related entities.
On-balance sheet exposures
Report all on-balance sheet exposures to the related entity noted in column 1. This includes all loans and advances to the related entity, equity investment in the related entity, and all other claims on the related entity. Any accrued interest associated with the exposure should also be included.
3.1Equity investment
Report in column 3.1 the book value of equity investment in the related entity. Exclude any equity investment in the related entity that has been deducted from the ADI’s Level 1 (stand-alone) capital for capital adequacy purposes (see Prudential Standard APS 111 Capital Adequacy: Measurement of Capita (APS 111)).
3.2Other
Report in column 3.2 the book value of all other on-balance sheet exposures to the related entity on a net basis. Net basis means net of exposures excluded under paragraphs 28(b)(ii)-(vi) in APS 222, specifically:
exposures deducted from the ADI’s Level 1 (stand-alone) capital for capital adequacy purposes (see APS 111);
exposures to the extent that they are secured by cash deposits (subject to satisfying the criteria set out in Attachment B to Guidance Note AGN 112.1 Risk-Weighted On-Balance Sheet Credit Exposures (AGN 112.1));
exposures to the extent that they are guaranteed by governments, or secured by government securities (subject to satisfying the conditions set out in paragraphs 9, 12, 13, 14 and 15 of AGN 112.1);
exposures arising in the course of settlement of market-related contracts; and
exposures to the extent that they have been written off or specifically provided for.
Off-balance sheet exposures
4.1.Non-market related
This includes all commitments, whether revocable or not, which have been advised to the related entity reported in column 1 (see Attachment A to Guidance Note AGN 112.2 Risk-Weighted Off-Balance Sheet Credit Exposures (AGN 112.2) for examples of these commitments). For SCCIs that are involved in self-acquiring of credit card transactions, include any potential chargeback exposures to the related entity (merchant).
Exclude:
internal limits that have not been formally advised to the related entity and may be cancelled at the ADI’s/ELE’s (as appropriate) discretion.
Report in column 4.1 the value of all unused commitments to the related entity (do not apply credit conversion factors or risk weightings to the value) on a net basis (i.e. net of exposures excluded under paragraphs 28(b)(ii)-(vi) in APS 222 as detailed in point 3.2 above).
SCCIs should use their own methodology in determining the amount of potential chargeback exposures to the related entity (e.g. this could be based on the SCCI’s historical trends of chargeback exposures to the related entity). Any funds held as performance bond from related entities for settling any outstanding liabilities to the reporting SCCI (e.g. reimbursement for merchant chargebacks) must be placed in a trust account with an ADI authorised to accept deposits to be eligible for netting purposes.
Exposures arising from repos (i.e. sale and repurchase agreements) and reverse repos (i.e. purchase and resale agreements) of securities should be reported as exposures to the issuer of the securities and collateralised loans to the counterparty respectively.
4.2.Market related
Include:
all exposures arising from off-balance sheet market related contracts with the related entity reported in column 1 (see AGN 112.2) for examples of these contracts).
Report in column 4.2 the credit equivalent amounts of all market related contracts on a net basis (i.e. net of exposures excluded under paragraphs 28(b)(ii)-(vi) in APS 222 as detailed in point 3.2 above). The credit equivalent amounts of these contracts are to be calculated in accordance with AGN 112.2 or Guidance Note AGN 112.3 Netting (112.3) where netting applies. Netting by novation and close-out netting are permissible for market related contracts provided all the requirements set out in AGN 112.3 for bilateral netting are met.
Total exposures
5.1Amount
This represents the total of column numbers 3.1, 3.2, 4.1 and 4.2.
5.2As % of capital base
This represents the value reported for column 5.1 divided by the ADI’s capital base as reported in ‘Memorandum items’ (i).
Memorandum items
Capital base of licensed ADI
Report the ADI’s capital base at Level 1 for the reporting quarter (as shown in ARF 110.0 Capital Adequacy (Licensed ADI) for the same reporting quarter).
Aggregate exposure to all related ADIs (including overseas based equivalents)
Report the ADI’s/ELE’s (as appropriate) aggregate exposure to all related ADIs and related overseas based equivalents on a net basis (i.e. net of exposures excluded under paragraphs 28(b)(ii)-(vi) in APS 222 as detailed in points 3.1 and 3.2 above).
Aggregate exposure to all related entities other than related ADIs and related overseas based equivalents
Report the ADI’s/ELE’s (as appropriate) aggregate exposure to all related entities other than related ADIs and related overseas based equivalents on a net basis (i.e. net of exposures excluded under paragraphs 28(b)(ii)-(vi) in APS 222 as detailed in points 3.1 and 3.2 above).
Part B: 10 Largest exposures to ELE-eligible subsidiaries
Part B is to be completed by all locally incorporated banks and locally-incorporated non-bank ADIs (including SCCIs) that have APRA-approved ELE-eligible subsidiaries. Report in this part on a net basis (explained in detail below) the ADI’s 10 largest exposures to individual subsidiaries that form part of the ADI’s ELE (i.e. 10 largest exposures to ELE-eligible subsidiaries).
The following instructions are applicable to Part B of this form.
Name of entity
Report in column 1 the names of the relevant individual ELE-eligible subsidiaries to which the ADI has exposures to.
On-balance sheet exposures
Report all on-balance sheet exposures to the subsidiary noted in column 1. This includes all loans and advances to the subsidiary, equity investment in the subsidiary, and all other claims on the subsidiary. Any accrued interest associated with the exposure should also be included.
Equity investment
Report in column 2.1 the book value of equity investment in the subsidiary. Exclude any equity investment in the subsidiary that has been deducted from the ADI’s Level 1 (stand-alone) capital for capital adequacy purposes (see APS 111).
Other
Report in column 2.2 the book value of all other on-balance sheet exposures to the subsidiary on a net basis. Net basis means net of the following exposures:
exposures deducted from the ADI’s Level 1 (stand-alone) capital for capital adequacy purposes (see APS 111);
exposures to the extent that they are secured by cash deposits (subject to satisfying the criteria set out in Attachment B to AGN 112.1);
exposures to the extent that they are guaranteed by governments, or secured by government securities (subject to satisfying the conditions set out in paragraphs 9, 12, 13, 14 and 15 of AGN 112.1);
exposures arising in the course of settlement of market-related contracts; and
exposures to the extent that they have been written off or specifically provided for.
Off-balance sheet exposures
3.1Non-market related
Include:
all commitments, whether revocable or not, which have been advised to the subsidiary reported in column 1 (see Attachment A to AGN 112.2 for examples of these commitments).
Exclude:
internal limits that have not been formally advised to the subsidiary and may be cancelled at the ADI’s discretion.
Report in column 3.1 the value of all unused commitments to the subsidiary (do not apply credit conversion factors or risk weightings to the value) on a net basis (i.e. net of exposures detailed in point 2.2 above).
3.2Market related
Include:
all exposures arising from off-balance sheet market related contracts with the subsidiary reported in column 1 (see AGN 112.2 for examples of these contracts).
Report in column 3.2 the credit equivalent amounts of all market related contracts on a net basis (i.e. net of exposures detailed in point 2.2 above). The credit equivalent amounts of these contracts are to be calculated in accordance with AGN 112.2 or AGN 112.3 where netting applies. Netting by novation and close-out netting are permissible for market related contracts provided all the requirements set out in AGN 112.3 for bilateral netting are met.
Total exposures
This represents the total of column numbers 2.1, 2.2, 3.1 and 3.2.
Memorandum item
Aggregate exposure to all ELE-eligible subsidiaries
Report the ADI’s aggregate exposure to all ELE-eligible subsidiaries on a net basis (i.e. net of exposures detailed in points 2.1 and 2.2 above).
Part C: Exposures to head office, overseas branches, Australian and overseas subsidiaries
Part C is to be completed by all foreign ADIs and SCCIs that operate as branches in Australia. Report in this part on a net basis (explained in detail below) exposures of the Australian branch to head office, to individual overseas branches, as well as to individual Australian and overseas subsidiaries of parent.
The following instructions are applicable to Part C of this form.
Name of entity
Report in column 1 the name of the entity to which the Australian branch has exposures to.
On-balance sheet exposures
This includes all loans and advances and all other claims on the entity noted in column 1. Any accrued interest associated with the exposure should also be included.
Report in column 2 the book value of all on-balance sheet exposures to the entity on a net basis. Net basis means net of the following exposures:
exposures to the extent that they are secured by cash deposits (subject to satisfying the criteria set out in Attachment B to AGN 112.1);
exposures to the extent that they are guaranteed by governments, or secured by government securities (subject to satisfying the conditions set out in paragraphs 9, 12, 13, 14 and 15 of AGN 112.1);
exposures arising in the course of settlement of market-related contracts; and
exposures to the extent that they have been written off or specifically provided for.
Off-balance sheet exposures
3.1Non-market related
Include:
all commitments, whether revocable or not, which have been advised to the entity reported in column 1 (see Attachment A to AGN 112.2 for examples of these commitments).
Exclude:
internal limits that have not been formally advised to the entity and may be cancelled at the branch’s discretion.
Report in column 3.1 the value of all unused commitments to the entity (do not apply credit conversion factors or risk weightings to the value) on a net basis (i.e. net of exposures detailed in point 2 above).
Exposures arising from repos (i.e. sale and repurchase agreements) and reverse repos (i.e. purchase and resale agreements) of securities should be reported as exposures to the issuer of the securities and collateralised loans to the counterparty respectively.
3.2Market related
Include:
all exposures arising from off-balance sheet market related contracts with the entity reported in column 1 (see AGN 112.2 for examples of these contracts).
Report in column 3.2 the credit equivalent amounts of all market related contracts on a net basis (i.e. net of exposures detailed in point 2 above). The credit equivalent amounts of these contracts are to be calculated in accordance with AGN 112.2 or AGN 112.3 where netting applies. Netting by novation and close-out netting are permissible for market related contracts provided all the requirements set out in AGN 112.3 for bilateral netting are met.
Total exposures
This represents the total of column numbers 2, 3.1 and 3.2.
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