Australian Prudential Regulation Authority instrument fixing charges No. 9 of 2006
Representative offices of foreign banks
EXPLANATORY STATEMENT
Prepared by the Australian Prudential Regulation Authority
Australian Prudential Regulation Authority Act 1998, subsection 51(1)
Acts Interpretation Act 1901, subsection 33(3)
Under subsection 51(1) of the Australian Prudential Regulation Authority Act 1998 (the Act), the Australian Prudential Regulation Authority (APRA) may, by written instrument, fix charges to be paid to APRA by a person in respect of (i) services and facilities APRA provides the person and (ii) applications made to APRA under any law of the Commonwealth. Under subsection 51(1), the instrument may also provide for the waiver or refund of charges.
Subsection 33(3) of the Acts Interpretation Act 1901 provides that where an Act confers a power to make, grant or issue any instrument the power shall, unless the contrary intention appears, be construed as including a power exercisable in the like manner and subject to the like conditions (if any) to repeal, rescind, revoke, amend, or vary any such instrument.
- Background
Instrument Fixing Charges to be Paid to APRA No 3 of 2004 (the existing instrument) fixes charges for applications for APRA’s consent under paragraph 67(1)(c) of the Banking Act 1959 (the Banking Act) to the establishment of a representative office in Australia and the monitoring by APRA of the operations of the representative office and the foreign bank’s compliance with the conditions imposed on the consent pursuant to subsection 67(2) of the Banking Act.
In contrast to commercial banks, central banks are typically government agencies or government-chartered authorities responsible for the conduct of monetary policy, management of their national government’s funds and foreign exchange reserves, and in some cases, financial system oversight functions. Given their public policy functions and official status, central banks are generally established under their own legislation and are generally not subject to banking or corporation laws and regulations in their home country.
The business of a representative office of a foreign commercial bank in Australia is limited to liaison activities designed to facilitate the commercial enterprise in the home country, and would generally include activities such as liaising with Australian customers of the bank, the provision of factual information relating to the bank’s products and services upon request and undertaking credit assessments and reports on Australian entities. The primary activities of a representative office of a central bank in Australia would be to assist the central bank to perform its central bank functions and would include conducting research relating to the reform and development of the home country’s economic system and financial industry and liaising with the Reserve Bank of Australia, APRA and other government instrumentalities.
APRA considers that given the official status of a central bank and the fact that activities of its representative office would be more limited than those of a commercial bank representative office and would not be commercial in nature, it is appropriate to waive the charges that would ordinarily apply in respect of:
(i) an application for APRA’s consent under paragraph 67(1)(c) of the Banking Act to the establishment of an office in Australia; and
(ii) monitoring by APRA of the operations of the office.
The waiving of charges in respect of central bank representative offices is consistent with overseas practice.
2. Purpose of the instrument
Australian Prudential Regulation Authority instrument fixing charges No. 9 of 2006 (the instrument) varies the existing instrument to give APRA the power to waive charges for applications and monitoring services in respect of central banks.
3. Consultation
As the instrument is of a minor nature and does not substantially alter existing arrangements, consultation was considered unnecessary.