Financial Sector (Collection of Data) (reporting standard) determination No. 23 of 2008
Reporting standard ARS 222.0 Exposures to Related Entities
Financial Sector (Collection of Data) Act 2001
I, Wayne Stephen Byres, 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 Reporting Standard ARS 222.0 Exposures to Related Entities made by Financial Sector (Collection of Data) (reporting standard) determination No. 11 of 2006; and
· DETERMINE Reporting Standard ARS 222.0 Exposures to Related Entities in the form set out in the Schedule, which applies to financial sector entities to the extent provided 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, and the revoked reporting standard shall cease to apply, on the later of 1 April 2008 and the date of registration of this instrument on the Federal Register of Legislative Instruments.
Dated 4th February 2008
[Signed]
Wayne Byres
Executive General Manager
Diversified Institutions Division
Interpretation
In this Determination
APRA means the Australian Prudential Regulation Authority.
Federal Register of Legislative Instruments means the register established under section 20 of the Legislative Instruments Act 2003.
Schedule
Reporting Standard ARS 222.0 Exposures to Related Entities comprises the 20 pages commencing on the following 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 and outlines the overall requirements for the provision of information to APRA relating to an authorised deposit-taking institution’s exposures to related entities. 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
1. 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
2. This reporting standard applies to all authorised deposit-taking institutions (ADIs).
Information required
3. A branch of a foreign ADI or 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.
4. 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.
Form and method of submission
5. The information required by this reporting standard must be given to APRA in electronic form, using one of the electronic submission mechanisms provided by the ‘Direct to APRA’ (also known as ‘D2A’) application.
Note: the Direct to APRA application software may be obtained from APRA.
Reporting periods and due dates
6. Subject to paragraph 7, an ADI to which this reporting standard applies 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.
7. 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.
8. The information required by this reporting standard must be provided to APRA in accordance with the table below. The right hand column of the table sets out the number of business days after the end of the reporting period to which the information relates within which information must be submitted to APRA by an ADI in the classes set out in the left hand column.
Class of ADI
Number of business days
Australian-owned Bank
20
Foreign Subsidiary Bank
20
Branch of a Foreign Bank
20
Building Society
15
Credit Union[1]
15
Specialist Credit Card Institution (SCCI)
15
Other ADI
15
9. 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
10. 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.
11. 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
12. 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.
Minor alterations to forms and instructions
13. 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.
14. If APRA makes such a variation it must notify in writing each ADI that is required to report under this reporting standard.
Transitional
15. 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.
Note: for the avoidance of doubt, if an ADI was required to report under an old reporting standard, and the reporting documents were due before the date of revocation of the old reporting standard, the ADI is still required to provide the overdue reporting documents in accordance with the old reporting standard.
Interpretation
16. In this reporting standard:
Accounting Standard AASB 127 means the accounting standards so made by the Australian Accounting Standards Board.
ADI means an authorised deposit-taking institution within the meaning of the Banking Act 1959.
AGS 1008 means the auditing and assurance standard entitled ‘Audit Implications of Prudential Reporting Requirements for Authorised Deposit-taking Institutions’ so made by the Auditing and Assurance Standards Board.
APRA means the Australian Prudential Regulation Authority established under the Australian Prudential Regulation Authority Act 1998.
Australian-owned bank means a locally incorporated ADI that assumes or uses the word ‘bank’ in relation to its banking business and is not a foreign subsidiary bank.
branch of a foreign bank means a ‘foreign ADI’ as defined in section 5 of the Banking Act 1959, but does not include a SCCI that is a foreign ADI.
building society means a locally incorporated ADI that assumes or uses the expression ‘building society’ in relation to its banking business.
business days means ordinary business days, exclusive of Saturdays, Sundays and public holidays.
class of ADI means each of the following:
(i) Australian-owned bank;
(ii) foreign subsidiary bank;
(iii) branch of a foreign bank;
(iv) building society;
(v) credit union;
(vi) other ADI; and
(vii) specialist credit card institution.
consolidated ADI group means a group comprising:
(a) an ADI that is a highest parent entity; and
(b) each subsidiary (within the meaning of Accounting Standard AASB 127) of that ADI, whether the subsidiary is locally-incorporated or not, other than a subsidiary that is excluded by the instructions attached to this standard.
credit union means a locally incorporated ADI that assumes or uses the expression ‘credit union’ in relation to its banking business and includes Cairns Penny Savings & Loans Limited.
due date means the relevant due date under paragraph 8 or, if applicable, paragraph 9.
Extended Licensed Entity (ELE) means, in relation to a locally-incorporated ADI, the ADI and each subsidiary of the ADI specified in the approval, given by APRA, on a consolidated basis in accordance with Prudential Standard APS 110 Capital Adequacy. The ELE forms a single entity for reporting purposes.
foreign subsidiary bank means a locally incorporated ADI in which a bank that is not locally incorporated has a stake of more than 15 per cent.
highest parent entity means an ADI that satisfies all of the following conditions:
(a) it is locally-incorporated;
(b) it has at least one subsidiary (within the meaning of Accounting Standard AASB 127); and
(c) it is not itself a subsidiary (within the meaning of Accounting Standard AASB 127) of an ADI that is locally-incorporated.
locally incorporated means incorporated in Australia or in a State or Territory of Australia, by or under a Commonwealth, State or territory law.
other ADI means an ADI that is not an Australian-owned bank, a branch of a foreign bank, a building society, a credit union, a foreign subsidiary bank or a specialist credit card institution but does not include Cairns Penny Savings & Loans Limited.
reporting period means a period mentioned in paragraph 6 or, if applicable, paragraph 7.
specialist credit card institution means an ADI that is subject to a condition on its authority under section 9 of the Banking Act 1959 confining the banking business that the ADI is authorised to carry on to the activities of credit card acquiring and credit card issuing in any credit card scheme that was designated as a payment system under section 11 of the Payment Systems (Regulation) Act 1998 on 11 April 2001.
stake means a stake determined under the Financial Sector (Shareholdings) Act 1998, as if the only associates that were taken into account under paragraph (b) of subclause 10(1) of the Schedule to that Act were those set out in paragraphs (h), (j) and (l) of subclause 4(1).
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:
· branches of foreign banks 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
Australian-owned banks, foreign subsidiary banks and branches of foreign 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:
1. foreign currency monetary items outstanding at the reporting date must be translated at the spot rate at the reporting date;[2]
2. 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;[3]
3. 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
4. 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. Australian-owned banks, foreign subsidiary banks, branches of foreign banks and other ADIs 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 as otherwise specified in these instructions, the following applies:
1. Where an ADI (or a member of its Level 2 consolidated group) participates in a securitisation that meets APRA’s operational requirements for regulatory capital relief under Prudential Standard APS 120 Securitisation (APS 120):
(a) special purpose vehicles (SPVs) holding securitised assets may be treated as non-consolidated independent third parties for regulatory reporting purposes, irrespective of whether the SPVs (or their assets) are consolidated for accounting purposes;
(b) the assets, liabilities, revenues and expenses of the relevant SPVs may be excluded from the ADI’s reported amounts in APRA’s regulatory reporting returns; and
(c) the underlying exposures (i.e. the pool) under such a securitisation may be excluded from the calculation of the ADI’s regulatory capital (refer to APS 120). However, the ADI must still hold regulatory capital for the securitisation exposures[4] that it retains or acquires and such exposures are to be reported in Form ARF 120.0 Standardised – Securitisation or Forms ARF 120.1A to ARF 120.1C IRB – Securitisation (as appropriate). The RWA relating to such securitisation exposures must also be reported in Form ARF 110.0 Capital Adequacy (ARF 110.0).
2. Where an ADI (or a member of its Level 2 consolidated group) participates in a securitisation that does not meet APRA’s operational requirements for regulatory capital relief under APS 120, or the ADI elects to treat the securitised assets as on-balance sheet assets under Prudential Standard APS 112 Capital Adequacy: Standardised Approach to Credit Risk (APS 112) or Prudential Standard APS 113 Capital Adequacy: Internal Ratings-based Approach to Credit Risk, such exposures are to be reported as on-balance sheet assets in APRA’s regulatory reporting returns. In addition, these exposures must also be reported as a part of the ADI’s total securitised assets within Form ARF 120.2 Securitisation – Supplementary Items.
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 Prudential Standard APS 110 Capital Adequacy (APS 110) 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 110 and APS 222).
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 Australia.[5] Where appropriate, APRA may deem that other entities (and their subsidiaries) represent a “related entity” of an ADI.
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 Australian-owned banks and foreign subsidiary 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.
3.1 Equity 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 (refer to Prudential Standard APS 111 Capital Adequacy: Measurement of Capital (APS 111)).
3.2 Other
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 33(b)(ii)-(vi) in APS 222, specifically:
· exposures deducted from the ADI’s Level 1 (stand-alone) capital for capital adequacy purposes (refer to APS 111);
· exposures to the extent that they are secured by cash deposits (subject to satisfying the criteria set out in Attachment G to APS 112);
· exposures to the extent that they are guaranteed by governments, or secured by government securities (subject to satisfying the conditions set out in APS 112);
· 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 (refer to Table 3 in Attachment B to APS 112 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 33(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 (refer to Attachment B to APS 112) 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 33(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 Attachment B of APS 112 or Attachment I to APS 112 where netting applies. Netting by novation and close-out netting are permissible for market related contracts provided all the requirements set out in Attachment I to APS 112 for bilateral netting are met.
Total exposures
5.1 Amount
This represents the total of column numbers 3.1, 3.2, 4.1 and 4.2.
5.2 As % 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
(i) Capital base of licensed ADI
Report the ADI’s capital base at Level 1 for the reporting quarter (as shown in ARF 110.0 for the same reporting quarter).
(ii) 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 33(b)(ii)-(vi) in APS 222 as detailed in points 3.1 and 3.2 above).
(iii) 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 33(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 Australian-owned banks and foreign subsidiary 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 (refer to 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 (refer to APS 111);
· exposures to the extent that they are secured by cash deposits (subject to satisfying the criteria set out in Attachment B to APS 112;
· exposures to the extent that they are guaranteed by governments, or secured by government securities (subject to satisfying the conditions set out in APS 112);
· 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.
1. Off-balance sheet exposures
3.1 Non-market related
Include:
· all commitments, whether revocable or not, which have been advised to the subsidiary reported in column 1 (refer to Attachment B to APS 112 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).
3.2 Market related
Include:
· all exposures arising from off-balance sheet market related contracts with the subsidiary reported in column 1 (refer to Attachment B to APS 112 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 Attachments B and Attachment I of APS 112 where netting applies. Netting by novation and close-out netting are permissible for market related contracts provided all the requirements set out in Attachment I of APS 112 for bilateral netting are met.
2. Total exposures
This represents the total of column numbers 2.1, 2.2, 3.1 and 3.2.
3. 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.
1. Name of entity
Report in column 1 the name of the entity to which the Australian branch has exposures to.
2. 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 G to APS 112);
· exposures to the extent that they are guaranteed by governments, or secured by government securities (subject to satisfying the conditions set out in APS 112);
· 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.
3. Off-balance sheet exposures
3.1 Non-market related
Include:
· all commitments, whether revocable or not, which have been advised to the entity reported in column 1 (refer to Table 3 of Attachment B to APS 112 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.
3.2 Market related
Include:
· all exposures arising from off-balance sheet market related contracts with the entity reported in column 1 (refer to Attachment B to APS 112 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 Attachment I to APS 112 where netting applies. Netting by novation and close-out netting are permissible for market related contracts provided all the requirements set out in Attachment I to APS 112 for bilateral netting are met.
4. Total exposures
This represents the total of column numbers 2, 3.1 and 3.2.
[1] The definitions of ‘credit union’ and ‘other ADI’ in paragraph 16 of this reporting standard provide that Cairns Penny Savings & Loans Limited is to be treated in accordance with the reporting period requirements applicable to credit unions for the purposes of paragraph 8.
[2] 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.
[3] 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.
[4] Securitisation exposures are defined in accordance with APS 120.
[5] 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.
