Authority to carry on banking business 2022 – NongHyup Bank
Banking Act 1959
To: NongHyup Bank ABN 85 649 572 449 (the body corporate)
SINCE the body corporate has applied for an authority to carry on banking business in Australia for a limited time,
I, Therese McCarthy Hockey, a delegate of APRA:
(a) under subsection 9(3) of the Banking Act 1959 (the Act), GRANT the body corporate an authority to carry on banking business in Australia (the section 9 authority); and
(b) under paragraph 9AA(1)(a) of the Act, IMPOSE conditions on the section 9 authority, as specified in the schedule.
This instrument commences on the day it is made. Dated: 12 August 2022
Therese McCarthy Hockey Executive Director Banking Division
Interpretation
In this instrument:
APRA means the Australian Prudential Regulation Authority.
banking business has the meaning given in subsection 5(1) of the Act.
section 9 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.
A decision to impose conditions on a section 9 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 section 9 authority
The body corporate, as a foreign ADI carrying on banking business in Australia, must not accept deposits or other funds for amounts which are less than $250,000 from any source other than from:
(a) incorporated entities;
(b) persons or unincorporated entities that are not residents of Australia;
(c) its own employees; or
(d) persons or non-incorporated entities with an initial balance with the foreign ADI of at least $250,000.
Interpretation
In this schedule:
foreign ADI has the meaning given in subsection 5(1) of the Act.
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Overview
The Authority to carry on banking business 2022 was enacted by Therese McCarthy Hockey, a delegate of the Australian Prudential Regulation Authority (APRA), and it grants NongHyup Bank, a South Korean bank with an Australian Business Number (ABN) 85 649 572 449, the authority to conduct banking business in Australia for a limited time. This authorisation is granted under the provisions of the Banking Act 1959. The primary purpose of this Act is to ensure the stability and integrity of the Australian financial system by regulating and supervising authorised deposit-taking institutions (ADIs), including foreign ADIs such as NongHyup Bank, which wish to operate within the Australian market. The enactment of this legislation addresses the need for stringent oversight and regulation of foreign banks operating in Australia to protect depositors and maintain financial stability.
The conditions imposed on NongHyup Bank's section 9 authority include restrictions on the acceptance of deposits or other funds from certain sources to mitigate potential risks. Specifically, the bank is prohibited from accepting deposits or funds below $250,000 from sources other than incorporated entities, non-residents, its own employees, or entities with an initial balance of at least $250,000. This measure is intended to manage the financial risks associated with smaller deposits and ensure the bank's operations align with the regulatory framework designed to safeguard the Australian financial system.
Scope and Application
The Authority to carry on banking business 2022 issued by the Australian Prudential Regulation Authority (APRA) grants NongHyup Bank, an entity with an Australian Business Number (ABN) of 85 649 572 449, a limited-time authority to operate as a banking institution within Australia. This authority is granted under the Banking Act 1959 and applies specifically to NongHyup Bank as a foreign authorised deposit-taking institution (ADI). The authority is subject to certain conditions outlined in the accompanying schedule, which includes restrictions on the acceptance of deposits or other funds under specific circumstances. The legislation applies to NongHyup Bank and is geographically limited to Australia, reflecting the jurisdictional reach of the Commonwealth under the Act. The authority does not extend to other entities or individuals unless explicitly included in subordinate instruments or additional regulations that might further define the scope of the authority.
Key Provisions
The Authority to Carry on Banking Business 2022 (NongHyup Bank) gazetted under the Banking Act 1959 grants NongHyup Bank, with ABN 85 649 572 449, a temporary authority to conduct banking business in Australia (section 9 authority). This authority comes with specific conditions imposed by APRA, detailed in the attached schedule. These conditions include restrictions on the acceptance of deposits and funds from certain sources. For example, the bank is prohibited from accepting deposits or funds for amounts less than $250,000 from unincorporated entities, non-residents of Australia, its own employees, or individuals or unincorporated entities with an initial balance of less than $250,000. The only exceptions are deposits or funds from incorporated entities.
The obligations imposed on NongHyup Bank by this Act include adhering to the specified conditions on its section 9 authority. These conditions are designed to ensure that the bank operates within the regulatory framework set by APRA, particularly focusing on the types of deposits and funds it can accept. By accepting this authority, the bank must comply with these terms to legally operate in Australia. Additionally, the bank must ensure that its operations align with the overall objectives of the Banking Act 1959, which aims to maintain the stability and integrity of the Australian banking system.
Failure to comply with the conditions set forth in the Authority to Carry on Banking Business 2022 (NongHyup Bank) can result in various penalties and consequences. Under the Banking Act 1959, breaches of the conditions could lead to enforcement actions by APRA. This may include the imposition of fines, restrictions on the bank’s operations, or even the revocation of the section 9 authority. In severe cases, legal proceedings might be initiated, leading to civil or criminal penalties. While the exact maximum penalties are not specified in the gazette, they would typically be determined by the severity of the breach and the discretion of the relevant authorities. The bank is therefore required to ensure strict adherence to the conditions to avoid these potential repercussions.