Authority to be a NOHC of an ADI 2022 – ANZ Group Holdings Limited

Administered by Department of the Treasury

Legislation au C2022G00974 In force Gazette

Legislation content

 

 

Authority to be a NOHC of an ADI 2022 – ANZ Group Holdings Limited

Banking Act 1959

 

To: ANZ Group Holdings Limited ACN 659 510 791 (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 the restructure arrangement takes effect. Dated: 4 October 2022

 

 

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.

restructure arrangement means the arrangement set out in the Federal Court of Australia matter of Australia and New Zealand Banking Group Limited (File number VID536/2022).

 

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 NOHC and any ADIs that are subsidiaries of the NOHC 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 on the NOHC authority

Capital

 

  1. The NOHC must calculate and manage capital for the Non-Bank Group in accordance with an Economic Capital Model (ECM). The NOHC must ensure that the capital is held as Common Equity Tier 1 Capital within the Non-Bank Group at all times and that the ability of the NOHC’s prudentially regulated subsidiaries to meet their obligations to depositors, policy holders or beneficiaries is not adversely impacted by risks emanating from the Non-Bank Group.

 

2.             The ECM must be subject to appropriate governance, oversight and independent assurance.

 

3.             The NOHC must always ensure that the quality and quantity of the total capital of the NOHC’s Level 3 group is equivalent to, or greater than, the quality and quantity of the sum of the total capital of the consolidated Bank Group and the consolidated Non-Bank Group (adjusted as required to exclude any external capital raised directly by any Level 3 institution), unless otherwise agreed with APRA.

 

4.             The NOHC must ensure that the Internal Capital Adequacy Assessment Process (ICAAP) for the Bank Group includes an assessment of contagion risk from exposure to the NOHC and the Non-Bank Group.

 

5.             The NOHC must provide any information requested by APRA that APRA considers necessary to assess the prudential risks of the NOHC’s Level 3 group, including any information about the NOHC or the Non-Bank Group. The NOHC must provide quarterly reports to APRA, in a form acceptable to APRA and commencing with the quarter ending 31 March 2023, on capital adequacy, funding and exposures (a) between the Bank Group and the NOHC, and (b) between the Bank Group and the Non-Bank Group. Each report must be provided within 20 business days of the end of the quarter to which it relates, or within such further time as APRA may agree in writing.

 

Governance

 

6.             The NOHC must ensure that the Boards of the ADI and the Bank Holding Company each have at least one independent director who is not also a director of the NOHC or a company in the Non-Bank Group. The NOHC must ensure that the Chair, and a majority of the members, of the Board of the NOHC are not executives of any Level 3 institution.

 

Activities

 

7.             The NOHC must not undertake any activities, other than those set out below, unless the NOHC has obtained prior written agreement from APRA:

(a)          hold investments in its subsidiaries;

(b)          raise funds to invest in, or to provide support to, its subsidiaries;

(c)           hold properties used by other Level 3 institutions;

(d)          raise funds to conduct activities permitted under these conditions;

(e)          invest funds on behalf of the NOHC’s Level 3 group;

(f)            provide executive leadership across the NOHC’s Level 3 group;

(g)          activities that must be undertaken by a Level 3 Head to meet its obligations under APRA’s Prudential Standards, activities that the NOHC is required to undertake under a law, listing rule or requirement of any governmental agency or regulatory body; and

(h)          activities that relate to undertaking a ‘corporate centre’ role including group financial control, group treasury activities, risk management, settlements, information technology, human resources, financial reporting, taxation and other group services such as company secretarial services. These roles may be performed by companies in the Bank Group or service subsidiaries of the NOHC formed for that purpose.

 

8.             The NOHC must not:

(a)          itself issue deposit liabilities;

(b)          trade in financial instruments (other than for hedging for the purposes of carrying on the activities specified in paragraphs (a) to (e) of condition 7);

(c)           provide security over investments in its subsidiaries except with APRA’s prior written agreement;

(d)          conduct any other business that is not in connection with the activities specified in condition 7; and

(e)          provide material guarantees of the obligations of its subsidiaries except with APRA’s prior written agreement (including any related or similar guarantees that may be collectively material).

 

9.             The NOHC must not start any material business activity in the Non-Bank Group unless the NOHC has obtained prior written confirmation that APRA has no objection, and must consult with APRA in relation to any business in the Non-Bank Group that becomes material over time. The NOHC must ensure that the Non-Bank Group transfers to the Bank Group any activity that APRA notifies in writing to constitute an activity APRA determines may give rise to a prudential risk if retained by the Non-Bank Group.

 

10.         The NOHC must ensure that all services that are, or business that is, critical to the operations of the ADI are conducted within the ADI, or that the ADI will at all times have satisfactory access to the services or business if they are provided by third parties, including in the event of the exercise of APRA’s resolution powers.

 

11.         The NOHC must ensure that all critical functions are conducted within the ADI. Where a function is developed in the Non-Bank Group that becomes a critical function, it must be expeditiously transferred into the Bank Group.

 

12.         The NOHC must ensure that all activities of the Non-Bank Group that are not required or related to the business of the Bank Group are financially and operationally separable from the Bank Group immediately in resolution.

13.         The NOHC must ensure that the NOHC’s Level 3 group does not carry on any activities that pose excessive risk to the ADI. The NOHC must ensure that the Bank Group transfers to the Non-Bank Group any activities that APRA notifies in writing to constitute an undue risk to the ADI.

 

Interpretation

In this schedule:

Bank Group means the group of companies at Level 2 (within the meaning given in Prudential Standard APS 001 Definitions) of which the Bank Holding Company is the parent company.

Bank Holding Company means ANZ BH Pty Ltd ACN 658 939 952.

Common Equity Tier 1 Capital has the meaning given in Prudential Standard APS 111 Capital Adequacy: Measurement of Capital.

critical function means any function provided by an APRA-regulated entity that is important to financial system stability or the availability of essential financial services to a particular industry or community.

Internal Capital Adequacy Assessment Process (ICAAP) has the meaning given in

Prudential Standard APS 110 Capital Adequacy.

Level 3 group has the meaning given in Prudential Standard 3PS 001 Definitions. Level 3 Head has the meaning given in Prudential Standard 3PS 001 Definitions. Level 3 institution means an institution that is a member of the NOHC’s Level 3 group.

Non-Bank Group means all Level 3 institutions other than the NOHC and companies in the Bank Group.

prudentially regulated subsidiaries of the NOHC are those subsidiaries that are bodies regulated by APRA within the meaning given in the Australian Prudential Regulation Authority Act 1998.

the ADI means Australia and New Zealand Banking Group Limited ACN 005 357 522.

the NOHC means ANZ Group Holdings Limited ACN 659 510 791.

Unless the contrary intention appears, a reference in this schedule to an Act or Prudential Standard is a reference to the Act or Prudential Standard as in force from time to time.

Overview

The Authority to be a Non-Operating Holding Company of an Authorised Deposit-taking Institution 2022 (C2022G00974) is an instrument enacted by Therese McCarthy Hockey, a delegate of the Australian Prudential Regulation Authority (APRA), under the Banking Act 1959. This instrument grants ANZ Group Holdings Limited the authority to act as a non-operating holding company (NOHC) of an Authorised Deposit-taking Institution (ADI). The primary aim of this legislation is to provide APRA with the flexibility to manage the structural arrangements of financial institutions, ensuring that the stability and integrity of the financial system are maintained. By imposing specific conditions on the NOHC authority, APRA seeks to mitigate any potential risks that could arise from the relationship between the NOHC and its subsidiaries. This instrument, published in the Gazette, comes into effect on the day the restructure arrangement takes effect, as outlined in the Federal Court of Australia matter of Australia and New Zealand Banking Group Limited (File number VID536/2022). The enactment of this instrument by APRA under the Banking Act 1959 addresses the need for regulatory oversight in the complex structure of financial institutions, ensuring the protection of depositors and the maintenance of financial stability. The policy objective of this legislation is to provide a framework for the regulation of NOHCs, ensuring that they do not engage in activities that could pose a risk to the ADI or the broader financial system. By imposing specific conditions on the NOHC authority, APRA can effectively monitor and manage the risks associated with the structure and activities of financial institutions.

Scope and Application

The Authority to be a Non-Operating Holding Company (NOHC) of an Authorised Deposit-taking Institution (ADI) 2022, issued by Therese McCarthy Hockey as a delegate of the Australian Prudential Regulation Authority (APRA) under the Banking Act 1959, grants ANZ Group Holdings Limited (ANZ Holdings) the authority to function as a NOHC for Australia and New Zealand Banking Group Limited (ANZ). This authority applies to ANZ Holdings and its prudentially regulated subsidiaries, specifically imposing conditions that govern the management of capital, governance, and activities within the group. The jurisdiction of this authority is national, as it is issued under Commonwealth legislation. The authority does not apply to entities or individuals not part of ANZ Holdings or its subsidiaries. The Act extends its application through subordinate instruments, as evidenced by the conditions detailed in the accompanying schedule, which include specific requirements for capital management, governance arrangements, and permissible activities. These conditions ensure that ANZ Holdings maintains sufficient capital, adheres to appropriate governance standards, and refrains from certain activities that could pose risks to ANZ or its depositors.

Key Provisions

This legislation grants ANZ Group Holdings Limited (ANZGH), the non-operating holding company (NOHC), the authority to act as a NOHC for an authorised deposit-taking institution (ADI). Under subsection 11AA(2) of the Banking Act 1959, Therese McCarthy Hockey, a delegate of the Australian Prudential Regulation Authority (APRA), grants this authority. The authority is subject to specific conditions detailed in the accompanying schedule. This instrument takes effect on the day the restructuring arrangement becomes effective. The Banking Act 1959 imposes several obligations on ANZGH, including calculating and managing capital for the Non-Bank Group according to an Economic Capital Model (ECM) and ensuring that this capital is held as Common Equity Tier 1 Capital within the Non-Bank Group. ANZGH must also ensure the quality and quantity of the total capital of the NOHC’s Level 3 group is equivalent to, or greater than, the total capital of the consolidated Bank Group and the consolidated Non-Bank Group, unless otherwise agreed with APRA. Furthermore, ANZGH must include an assessment of contagion risk from exposure to the NOHC and the Non-Bank Group in the Internal Capital Adequacy Assessment Process (ICAAP) for the Bank Group and provide quarterly reports to APRA on capital adequacy, funding, and exposures between the Bank Group and the NOHC and between the Bank Group and the Non-Bank Group. ANZGH is required to ensure the Boards of the ADI and the Bank Holding Company each have at least one independent director who is not also a director of ANZGH or a company in the Non-Bank Group, and that the Chair, and a majority of the members, of the Board of ANZGH are not executives of any Level 3 institution. ANZGH must not undertake any activities, other than those specified in the schedule, unless it has obtained prior written agreement from APRA. The activities include holding investments in its subsidiaries, raising funds to invest in or provide support to its subsidiaries, holding properties used by other Level 3 institutions, raising funds to conduct permitted activities, investing funds on behalf of the NOHC’s Level 3 group, providing executive leadership across the NOHC’s Level 3 group, and undertaking activities required under APRA’s Prudential Standards or by any governmental agency or regulatory body. ANZGH must not issue deposit liabilities, trade in financial instruments (except for hedging purposes), provide security over investments in its subsidiaries except with APRA’s prior written agreement, conduct any other business not connected to permitted activities, or provide material guarantees of the obligations of its subsidiaries except with APRA’s prior written agreement. ANZGH must not start any material business activity in the Non-Bank Group unless it has obtained prior written confirmation that APRA has no objection, and must consult with APRA in relation to any business in the Non-Bank Group that becomes material over time. ANZGH must ensure the Non-Bank Group transfers to the Bank Group any activity that APRA determines may give rise to a prudential risk if retained by the Non-Bank Group. ANZGH must also ensure that all services or business critical to the operations of the ADI are conducted within the ADI or that the ADI will have satisfactory access to such services or business if provided by third parties. Additionally, ANZGH must ensure all critical functions are conducted within the ADI, and that all activities of the Non-Bank Group that are not required or related to the business of the Bank Group are financially and operationally separable from the Bank Group immediately in resolution. ANZGH must also ensure that the NOHC’s Level 3 group does not carry on any activities that pose excessive risk to the ADI and that the Bank Group transfers to the Non-Bank Group any activities that APRA determines constitute an undue risk to the ADI. Failure to comply with the conditions imposed under this authority may result in civil or criminal consequences, including potential penalties for breach of the Banking Act 1959. The specific penalties for breach are not detailed in the legislation but may include fines or other sanctions as prescribed by the Act or relevant regulations. The severity of the penalties would depend on the nature and extent of the breach, as well as any relevant mitigating or aggravating factors.

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.