Authority to be a NOHC of an ADI 2021 – Avenue Hold Limited
Banking Act 1959
To: Avenue Hold Limited ABN 50 628 071 198 (the NOHC)
I, Therese McCarthy Hockey, a delegate of APRA, under subsection 11AA(2) of the Banking Act 1959 (the Act), GRANT the NOHC an authority to be a NOHC of an ADI.
Under subsection 11AAA(1) of the Act, I IMPOSE on this NOHC authority the conditions specified in the schedule.
This instrument commences on the day it is made. Dated: 7 September 2021
Therese McCarthy Hockey Executive Director Banking Division
Interpretation
In this instrument:
APRA means the Australian Prudential Regulation Authority.
ADI has the meaning given in subsection 5(1) of the Act.
NOHC has the meaning given in subsection 5(1) of the Act.
NOHC authority has the meaning given in subsection 5(1) of the Act.
Notes
APRA is required to publish this instrument in the Gazette, and may also publish this instrument in any other way that APRA considers appropriate.
This NOHC authority operates as an authority in relation to the body corporate and any ADIs that are subsidiaries of the body corporate from time to time.
A decision to impose conditions on a NOHC authority is a decision to which Part VI of the Act applies. You may request APRA reconsider the decision in accordance with subsection 51B(1) of the Act. The request for reconsideration must be made in writing, must state the reasons for the request, and must be given to APRA within
21 days after the day on which you first received notice of this decision, or within such further period as APRA allows. If you are dissatisfied with the outcome of APRA’s reconsideration of the decision, you may, subject to the Administrative Appeals Tribunal Act 1975, apply to the Administrative Appeals Tribunal for review of the reconsidered decision. The address where written notice may be given to APRA is Level 12, 1 Martin Place, Sydney NSW 2000.
Schedule – conditions
Unless otherwise approved in writing by APRA, the NOHC must:
- ensure that where a related body corporate of the NOHC provides services that are, or conducts business that is, essential to the capacity of an ADI subsidiary of the NOHC to maintain the ADI’s operations, the related body corporate is a subsidiary of the NOHC;
2. not, and must ensure that the NOHC’s subsidiaries and any other entity that receives funding from the NOHC does not, provide funding to Liberty Financial Group Limited for the purpose of any of Liberty Financial Group Limited’s debt instruments or ‘special purpose vehicles’ (including but not limited to securitisation trusts and warehouse facilities) or any other credit/lending arrangement;
3. not vary the Subscription Agreement – Series B entered into between Liberty Financial Group Limited and the NOHC on 3 June 2021;
4. operate its business activities independently of Liberty Financial Group Limited and Liberty Financial Group Limited’s subsidiaries;
5. not share any services or staff with Liberty Financial Group Limited or Liberty Financial Group Limited’s subsidiaries; and
6. not share any management or business strategies with Liberty Financial Group Limited or Liberty Financial Group Limited’s subsidiaries except in relation to the “White Label savings and transactional accounts” specified in the Subscription Agreement – Series B entered into between Liberty Financial Group Limited and the NOHC on 3 June 2021.
Page 2 of 2
Overview
The Authority to be a Non-Operating Holding Company (NOHC) of an Authorised Deposit-taking Institution (ADI) 2021, issued under the Banking Act 1959, was enacted to formalise and regulate the operations of Avenue Hold Limited ABN 50 628 071 198 as a NOHC for an ADI. This legislation addresses the need to provide clarity and regulatory oversight on the operations of non-operating holding companies in relation to ADIs, ensuring they do not engage in activities that could jeopardise the stability of the ADIs they control. The enactment of this authority by Therese McCarthy Hockey, an executive director of the Australian Prudential Regulation Authority (APRA), underscores the importance of maintaining robust oversight in the financial sector to protect consumers and the broader economy.
The policy objective, as stipulated in the Act, is to ensure that NOHCs like Avenue Hold Limited adhere to stringent conditions that promote the financial soundness of the ADIs they control, including maintaining operational independence and avoiding conflicts of interest with entities such as Liberty Financial Group Limited. This legislative instrument, published in the Gazette, sets forth conditions that the NOHC must comply with, unless otherwise approved by APRA, thereby ensuring that the NOHC operates in a manner that is conducive to the financial health and stability of the ADIs within its corporate structure.
Scope and Application
This legislation, C2021G00704 (Gazette), pertains to the granting of an authority to Avenue Hold Limited (NOHC) to act as a non-operating holding company (NOHC) of an authorised deposit-taking institution (ADI). Issued under the Banking Act 1959 by Therese McCarthy Hockey, an Executive Director of the Banking Division and a delegate of the Australian Prudential Regulation Authority (APRA), this authority is subject to specific conditions outlined in the schedule. The authority applies to Avenue Hold Limited, its subsidiaries, and any ADIs that may be subsidiaries of the NOHC at any given time. The jurisdictional reach of this legislation is Commonwealth-wide, reflecting APRA's role in the prudential regulation of financial institutions in Australia. The authority does not extend to any transactions or conduct outside the scope of the conditions specified, nor does it exempt the NOHC from the general provisions of the Banking Act 1959. The Act allows for the imposition of further conditions and restrictions through subordinate instruments, thereby providing flexibility in the regulatory oversight of the NOHC’s activities.
Key Provisions
The primary operative sections of the Authority to be a Non-Operating Holding Company (NOHC) of an Authorised Deposit-Taking Institution (ADI) 2021 for Avenue Hold Limited, ABN 50 628 071 198, are found in subsections 11AA(2) and 11AAA(1) of the Banking Act 1959. Under these sections, Therese McCarthy Hockey, as a delegate of the Australian Prudential Regulation Authority (APRA), grants the NOHC authority to function as such for an ADI. Additionally, the NOHC authority is subject to conditions specified in the accompanying schedule, which are imposed under subsection 11AAA(1) of the Act.
The obligations and requirements imposed on the NOHC by this legislation are stringent and focused on maintaining the operational integrity and independence of the ADI. Firstly, the NOHC must ensure that any related body corporate providing services essential to the ADI's operations is a subsidiary of the NOHC. Secondly, the NOHC, its subsidiaries, and any entities funded by it must not provide any funding to Liberty Financial Group Limited for its debt instruments, special purpose vehicles, or other credit/lending arrangements. Thirdly, the NOHC is prohibited from varying the Subscription Agreement – Series B entered into with Liberty Financial Group Limited on 3 June 2021. Fourthly, the NOHC must operate its business activities independently of Liberty Financial Group Limited and its subsidiaries. Fifthly, the NOHC is not allowed to share any services or staff with Liberty Financial Group Limited or its subsidiaries. Lastly, the NOHC is restricted from sharing any management or business strategies with Liberty Financial Group Limited or its subsidiaries, except in relation to the "White Label savings and transactional accounts" specified in the aforementioned Subscription Agreement.
Failure to comply with the conditions specified in the NOHC authority may result in various consequences, including civil and criminal penalties. While the specific penalties are not outlined in the provided text, breaches of the Banking Act 1959 can generally lead to substantial fines and, in more severe cases, imprisonment. Additionally, the NOHC may face regulatory action, including the revocation of its NOHC authority, which could significantly impact its ability to operate within the Australian financial sector. The NOHC also has the right to request reconsideration of the decision to impose conditions, and if dissatisfied with the outcome, can apply for review by the Administrative Appeals Tribunal.