Financial Sector (Collection of Data) determination No. 75 of 2005 Reporting Standard ARS 222.0 (2005) 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’) MAKE the reporting standard set out in the Schedule, which applies to the financial sector entities referred to in paragraph 2 of the reporting standard. Under section 15 of the Act, I DECLARE that the reporting standard shall begin to apply those financial sector entities on the date of registration on the Federal Register of Legislative Instruments. Dated 27 July 2005 [Signed] Wayne Byres Executive General Manager Diversified Institutions Division APRA Interpretation In this Notice APRA means the Australian Prudential Regulation Authority.
Schedule
Reporting Standard ARS 222.0 (2005)
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 (the Collection of Data Act). It requires all authorised deposit-taking institutions (ADIs), including foreign ADIs operating in Australia through branch operations, to report to APRA, generally on a quarterly basis, in relation to their exposures to related entities. This reporting standard outlines the overall requirements for the provision of relevant information to APRA. It should be read in conjunction with: · Form ARF 222.0 Exposures to Related Entities (Form ARF 222.0) 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 is used by APRA for the purpose of prudential supervision. It may also be used by the Reserve Bank of Australia.
Application and commencement
2. This reporting standard will apply, from the date of registration on the Federal Register of Legislative Instruments, to all ADIs.
Information required
3. A foreign ADI (including a foreign ADI that is 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.
Forms and method of submission
5. The information required by this reporting standard must be given to APRA either: (a) in electronic form, using one of the electronic submission mechanisms provided by the ‘Direct to APRA’ (also known as ‘D2A’) application; or (b) manually completed on paper, which must be faxed or mailed to APRA’s head office. Note: the Direct to APRA application software and paper forms may be obtained from APRA. Reporting periods and due dates 6. Subject to paragraph 7, an ADI 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 by the following times: (a) in the case of information required by paragraphs 3 and 4 from a locally-incorporated bank, foreign ADI (other than a specialist credit card institution) or locally-incorporated special service provider – 20 business days after the end of the reporting period to which the information relates; and (b) in the case of information required by paragraphs 3 and 4 from a locally- incorporated credit union, locally-incorporated building society, specialist credit card institution (whether locally-incorporated or not) or Cairns Penny Savings & Loans Limited – 15 business days after the end of the reporting period to which the information relates. 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 Assurances Standards Board of the Australian Accounting Research Foundation, 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. 13. If information under this reporting standard is provided in paper form, it must be signed on the front page of the relevant completed form by either: (a) the Principal Executive Officer of the ADI; or (b) the Chief Financial Officer of the ADI (whatever his or her official title may be).
Minor alterations to forms and instructions
14. 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. 15. If APRA makes such a variation it must notify in writing each ADI that is required to report under this reporting standard.
Transitional 16. If the due date for lodgement in respect of a reporting period is a day after the date of registration of this reporting standard on the Federal Register of Legislative Instruments, an ADI must report under this reporting standard in respect of that reporting period (including where the reporting period ended before the date of registration). Interpretation - classifications of ADIs 17. In this reporting standard: ADI means an authorised deposit-taking institution within the meaning of the Banking Act 1959. ADI list means the attached ADI list. building society means an ADI whose name appears under the heading ‘Building Societies’ in the ADI list. credit union means an ADI whose name appears under the heading ‘Credit Unions’ in the ADI list. Extended Licensed Entity (ELE) means, in relation to a locally-incorporated ADI: (a) the ADI; and (b) all subsidiaries of the ADI that have been approved under AGN 222.1 Extended Licensed Entity for the purposes of APS 222 Associations with Related Entities (each made under s 11AF of the Banking Act 1959) taken together and treated as if they formed a single entity for reporting purposes. foreign ADI means an ADI that is not incorporated in Australia. locally-incorporated means incorporated in Australia; locally-incorporated bank means an ADI incorporated in Australia whose name appears under the heading ‘Australian-owned Banks’ or ‘Foreign Subsidiary Banks’ in the ADI list. special service provider means an ADI whose name appears under the heading ‘Other ADIs’ in the ADI list (other than the Cairns Penny Savings & Loans Limited). specialist credit card institution means an ADI whose name appears under the heading ‘Specialist Credit Card Institutions (SCCIs)’ in the ADI list. 18. If an ADI is not in the ADI list, then: (a) if the ADI assumes or uses the word ‘bank’ in relation to its financial business, and is locally-incorporated, it is taken to be a locally-incorporated bank for the purposes of this reporting standard; (b) if the ADI assumes or uses the expression ‘building society’ in relation to its financial business, and is locally-incorporated, it is taken to be a locally-incorporated building society for the purposes of this reporting standard; (c) if the ADI assumes or uses the expression ‘credit union’, ‘credit society’ or ‘credit co-operative’ in relation to its financial business, and is locally-incorporated, it is taken to be a locally-incorporated credit union for the purposes of this reporting standard; and (d) if the ADI engages in credit card issuing or credit card acquiring, or both, and does not otherwise carry on banking business within the meaning of section 5 of the Banking Act 1959, it is taken to be a specialist credit card institution for the purposes of this reporting standard. 19. APRA may in writing determine that an ADI is taken to be a locally-incorporated bank, locally-incorporated building society, locally-incorporated credit union, foreign ADI, special service provider or specialist credit card institution for the purposes of this standard (even if, under paragraph 17 or 18, it comes within a different classification). Interpretation - other definitions 20. In this reporting standard: business days means ordinary business days, exclusive of Saturdays, Sundays and public holidays. Principal Executive Officer means the principal executive officer of the ADI for the time being, by whatever name called, and whether or not he or she is a member of the governing board of the entity. reporting period means a reporting period under paragraph 6 or, if applicable, paragraph 7.
The ADI list
Australian-owned Banks
· Adelaide Bank Limited · AMP Bank Limited · Australia and New Zealand Banking Group Limited · Bank of Queensland Limited · Bendigo Bank Limited · Commonwealth Bank of Australia · Commonwealth Development Bank of Australia Limited (a subsidiary of Commonwealth Bank of Australia) · Elders Rural Bank Limited · Macquarie Bank Limited · Members Equity Bank Pty Limited · National Australia Bank Limited · St George Bank Limited · Suncorp-Metway Limited · Westpac Banking Corporation
Foreign Subsidiary Banks
· Arab Bank Australia Limited · Bank of Cyprus Australia Pty Limited · BankWest (the trading name of Bank of Western Australia Limited, a foreign subsidiary bank following its sale to Bank of Scotland in December 1995) · Citibank Pty Limited (a subsidiary of Citibank N.A.) · HSBC Bank Australia Limited · ING Bank (Australia) Limited · Investec Bank (Australia) Limited · Laiki Bank (Australia) Limited · NM Rothschild & Sons (Australia) Limited · Rabobank Australia Limited (a subsidiary of Rabobank Nederland from October 1994)
Branches of Foreign Banks
· ABN AMRO Bank N.V. · Bank of America, National Association · Bank of China (subject to depositor protection provisions of the Banking Act 1959) · Bank of Tokyo-Mitsubishi, Ltd · Barclays Capital (the trading name of Barclays Bank plc) · BNP Paribas · Citibank N.A. · Credit Suisse · Deutsche Bank AG · HSBC Bank plc · ING Bank NV · JPMorgan Chase Bank, National Association · Mizuho Corporate Bank, Ltd · Oversea-Chinese Banking Corporation Limited · Rabobank Nederland (the trading name of Co-operative Central Raiffeisen-Boerenleenbank B.A.) · Royal Bank of Canada · Société Générale · Standard Chartered Bank · State Bank of India · State Street Bank and Trust Company · The International Commercial Bank of China · The Royal Bank of Scotland Plc · The Toronto-Dominion Bank · Taiwan Business Bank · UBS AG · United Overseas Bank Limited · WestLB AG
Building Societies
· ABS Building Society Ltd · B & E Ltd · Greater Building Society Ltd · Heritage Building Society Limited · Home Building Society Ltd · Hume Building Society Ltd · IMB Ltd · Lifeplan Australia Building Society Limited · Mackay Permanent Building Society Ltd · Maitland Mutual Building Society Limited · Newcastle Permanent Building Society Ltd · Pioneer Permanent Building Society Limited · The Rock Building Society Limited · Wide Bay Australia Ltd
Credit Unions
· Amcor Credit Co-operative Limited · AMP Employees' & Agents Credit Union Limited · Austral Credit Union Limited · Australian Central Credit Union Limited · Australian Defence Credit Union Ltd · Australian National Credit Union Limited · AWA Credit Union Limited · Bananacoast Community Credit Union Ltd · Bankstown City Credit Union Ltd · Berrima District Credit Union Ltd · Big River Credit Union Ltd · Big Sky Credit Union Ltd · Blue Mountains and Riverlands Community Credit Union Ltd · Broadway Credit Union Ltd · Calare Credit Union Ltd · Capital Credit Union Ltd · Capricornia Credit Union Ltd · Carboy (SA) Credit Union Limited · Central Murray Credit Union Limited · Central West Credit Union Limited · Circle Credit Co-operative Limited · Coastline Credit Union Limited · Collie Miners Credit Union Ltd · Combined Australian Petroleum Employees' Credit Union Ltd · Community Alliance Credit Union Limited · Community First Credit Union Limited · Companion Credit Union Limited · Comtax Credit Union Limited · Connect Credit Union of Tasmania Limited · Country First Credit Union Ltd · CPS Credit Union (SA) Ltd · CPS Credit Union Co-operative (ACT) Limited · Credit Union Australia Ltd · Credit Union Home Loans Australia Limited · Credit Union Incitec Pivot Limited · Croatian Community Credit Union Limited · CSR and Rinker Employees Credit Union Limited · Dairy Farmers Credit Union Ltd · Dana Employees Credit Union · Defence Force Credit Union Limited · Discovery Credit Union Ltd · Dnister Ukrainian Credit Co-operative Limited · ELCOM Credit Union Ltd · Electricity Credit Union Ltd · Encompass Credit Union Limited · Ericsson Employees Credit Co-operative Limited · Esso Employees' Credit Union Ltd · Eurobodalla Credit Union Ltd · Family First Credit Union Limited · Fire Brigades Employees' Credit Union Limited · Fire Service Credit Union Limited · Firefighters & Affiliates Credit Co-operative Limited · First Pacific Credit Union Limited · Fitzroy & Carlton Community Credit Co-operative Limited · Flying Horse Credit Union Co-operative Limited · Ford Co-operative Credit Society Limited · Gateway Credit Union Ltd · Geelong & District Credit Co-operative Society Limited · GMH (Employees) Q.W.L. Credit Co-operative Limited · Goldfields Credit Union Ltd · Gosford City Credit Union Ltd · Goulburn Murray Credit Union Co-operative Limited · H.M.C. Staff Credit Union Ltd · Heritage Isle Credit Union Limited · Hibernian Credit Union Limited · Holiday Coast Credit Union Ltd · Horizon Credit Union Ltd · Hoverla Ukrainian Credit Co-operative Ltd · Hunter Mutual Limited · Hunter United Employees' Credit Union Limited · Industries Mutual Credit Union Limited · Intech Credit Union Limited · Island State Credit Union Ltd · Karpaty Ukrainian Credit Union Limited · La Trobe Country Credit Co-operative Limited · La Trobe University Credit Union Co-operative Limited · Laboratories Credit Union Ltd · Latvian Australian Credit Co-operative Society Limited · Lithuanian Co-operative Society (Talka) Limited · Lysaght Credit Union Ltd · M.S.B. Credit Union Limited · MacArthur Credit Union Ltd · Macaulay Community Credit Co-operative Limited · Macquarie Credit Union Limited · Maleny and District Community Credit Union Limited · Manly Warringah Credit Union Ltd · Maritime Workers of Australia Credit Union Ltd · Maroondah Credit Union Ltd · MECU Limited · Media Credit Union Queensland Ltd · Melbourne University Credit Union Limited · Memberfirst Credit Union Limited · N.R.M.A. Employees' Credit Union Ltd · NACOS Credit Union Limited · New England Credit Union Ltd · Newcom Colliery Employees' Credit Union Ltd · North East Credit Union Co-operative Limited · Northern Inland Credit Union Ltd · Nova Credit Union Limited · NSW Teachers Credit Union Ltd · Old Gold Credit Union Co-operative Limited · Orana Credit Union Ltd · Orange Credit Union Limited · Phoenix (NSW) Credit Union Ltd · Pinnacle Credit Union Limited · Plenty Credit Co-operative Limited · Police & Nurses Credit Society Limited · Police Association Credit Co-operative Limited · Police Credit Union Limited · Polish Community Credit Union Ltd · Power Credit Union Limited · Powerstate Credit Union Ltd · Prospect Credit Union Limited · Pulse Credit Union Limited · Qantas Staff Credit Union Limited · Queensland Community Credit Union Limited · Queensland Country Credit Union Ltd · Queensland Police Credit Union Limited · Queensland Professional Credit Union Ltd · Queensland Teachers' Credit Union Limited · Queenslanders Credit Union Limited · RACV Credit Union Limited · Railways Credit Union Limited · Randwick Credit Union Limited · RegionalOne Credit Union Limited · Reliance Credit Union Ltd · Resources Credit Union Limited · RTA Staff Credit Union Limited · Satisfac Direct Credit Union Limited · Savings and Loans Credit Union (S.A.) Ltd · Security Credit Union Ltd · Select Credit Union Ltd · Service One Credit Union Ltd · SGE Credit Union Ltd · Shell Employees' Credit Union Limited · Shoalhaven Paper Mill Employee's Credit Union Ltd · South West Slopes Credit Union Ltd · Southern Cross Credit Union Limited · South-West Credit Union Co-operative Limited · St Mary's Swan Hill Co-operative Credit Society Limited · St Patrick's Mentone Co-operative Credit Society Limited · Statewest Credit Society Limited · Sutherland Credit Union Ltd · Sutherland Shire Council Employees' Credit Union Ltd · Sydney Credit Union Ltd · TAB Credit Union Limited · Tartan Credit Union Ltd · The Broken Hill Community Credit Union Ltd · The Gympie Credit Union Ltd · The Police Department Employees' Credit Union Limited · The Summerland Credit Union Limited · The TAFE and Community Credit Union Limited · The University Credit Society Limited · Traditional Credit Union Limited · TransComm Credit Co-operative Limited · Uni Credit Union Ltd · United Credit Union Limited · Victoria Teachers Credit Union Limited · Wagga Mutual Credit Union Ltd · Warwick Credit Union Ltd · WAW Credit Union Co-operative Limited · Westax Credit Society Ltd · Western City Credit Union Ltd · Woolworths/Safeway Employees' Credit Co-operative Limited · Wyong Council Credit Union Ltd · Yennora Credit Union Ltd
Specialist Credit Card Institutions (SCCIs)
Foreign-owned SCCIs · GE Capital Finance Australia · GE Finance Australasia Pty Ltd Locally Incorporated SCCIs · MoneySwitch Limited
Other ADIs
These companies are run by industry bodies and provide services (e.g. payments clearing) to member building societies and credit unions. · Australian Settlements Limited · Credit Union Services Corporation (Australia) Limited · Creditlink Services Limited One ADI that provides general banking services which does not fall into the other categories. · Cairns Penny Savings & Loans Limited
Reporting Form ARF 222.0 Exposures to Related Entities
Instruction Guide
Purpose The Exposures to Related Entities form collects information on an 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
The Exposures to Related Entities form is to be completed by the following: · Foreign ADIs 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). · All other ADIs (including locally incorporated Specialist Credit Card Institutions (SCCIs)) are required to complete Parts A and B of this form.
Unit of measurement
Banks are asked to complete the form in millions of Australian dollars rounded to one decimal place, and for other non-bank ADIs (including Specialist Credit Card Institutions (SCCIs)), in whole Australian dollars (no decimal place). Amounts denominated in foreign currency are to be converted to AUD in accordance with AASB 1012 ‘Foreign Currency Translation’. The general requirements of AASB 1012 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. Other items outstanding at the reporting date must not be retranslated subsequent to initial recognition of the transaction. Monetary items are defined to mean money held and assets and liabilities that are to be received or paid in fixed or determinable amounts of money. Monetary items arising under foreign currency derivative contracts at the reporting date must be translated as follows: · Where the exchange rate is fixed in the contract, at that fixed exchange rate; and · Where the exchange rate varies, at the spot rate at the reporting date.
Reporting period
The form is to be completed as at the last day of the stated reporting quarter. Locally incorporated banks, Foreign ADIs (other than specialist credit card institutions) and Special Service Providers 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 Specialist Credit Card Institutions (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 1014 ‘Set-off and Extinguishment of Debt’. Definitions This section provides guidance on the interpretation of certain items used in this form.
1. Licensed ADI
This refers to the operations of the reporting ADI on a stand-alone basis.
2. 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 Guidance Note AGN 222.1 Extended Licensed Entity for the purposes of Prudential Standard APS 222 Associations with Related Entities (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 Prudential Standard APS 222 Associations with Related Entities and Guidance Note AGN 222.1 Extended Licensed Entity).
3. 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[1]. Where appropriate, APRA may deem that other entities (and their subsidiaries) represent a “related entity” of an ADI.
4. Subsidiary
This is defined in accordance with the definition provided in AASB 1024 ‘Consolidated Accounts’ as “an entity that is controlled by a parent entity”[2] unless otherwise instructed by APRA. Control is defined by AASB 1024 as the capacity of an entity to dominate decision-making, directly or indirectly, in relation to the financial and operating policies of another entity so as to enable that other entity to operate with it in pursuing the objectives of the controlling entity. Capacity is defined by AASB 1024 as meaning ability or power, whether direct or indirect, and includes ability or power that is presently exercisable as a result of, by means of, in breach of, or by revocation of, any of or any combination of the following: (a) trusts; (b) relevant agreements; and (c) practices; whether or not enforceable.
5. Parent entity
This is defined by AASB 1024 as meaning an entity that controls another entity. AASB 1024 defines “entity” to mean any legal, administrative, or fiduciary arrangement, organisational structure, or other party (including a person) having the capacity to deploy scarce resources in order to achieve objectives.
6. 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.
7. 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).
8. 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/ELE (as appropriate) because they do not satisfy the asset or liability accounting recognition requirements e.g. contingent liabilities.
Instruction Guide for specific items The form has the following reporting components: · Part A: 10 Largest exposures to related entities · Part B: 10 Largest exposures to ELE-eligible subsidiaries · Part C: Exposures to head office, overseas branches, Australian and overseas subsidiaries Part A: 10 Largest exposures to related entities Part A is to be completed by all locally incorporated banks and locally-incorporated non-bank ADIs (including Specialist Credit Card Institutions (SCCIs)) on a Licensed ADI or Extended Licensed Entity (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); and · 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 (see Prudential Standard APS 111 Capital Adequacy: Measurement of Capital). 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 28(b)(ii)-(vi) in Prudential Standard APS 222 Associations with Related Entities, specifically: · exposures deducted from the ADI’s Level 1 (stand-alone) capital for capital adequacy purposes (see Prudential Standard APS 111 Capital Adequacy: Measurement of Capital); · exposures to the extent that they are secured by cash deposits (subject to satisfying the criteria set out in Attachment B to Guidance Note AGN 112.1 Risk-Weighted On-Balance Sheet Credit Exposures); · exposures to the extent that they are guaranteed by governments, or secured by government securities (subject to satisfying the conditions set out in paragraphs 9, 12, 13, 14 and 15 of Guidance Note AGN 112.1 Risk-Weighted On-Balance Sheet Credit Exposures); · 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 (see Attachment A to Guidance Note AGN 112.2 Risk-Weighted Off-Balance Sheet Credit Exposures for examples of these commitments). For Specialist Credit Card Institutions (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 28(b)(ii)-(vi) in Prudential Standard APS 222 Associations with Related Entities 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 (see Guidance Note AGN 112.2 Risk-Weighted Off-Balance Sheet Credit Exposures 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 28(b)(ii)-(vi) in Prudential Standard APS 222 Associations with Related Entities as detailed in point 3.2 above). The credit equivalent amounts of these contracts are to be calculated in accordance with Guidance Note AGN 112.2 Risk-Weighted Off-Balance Sheet Credit Exposures or Guidance Note AGN 112.3 Netting where netting applies. Netting by novation and close-out netting are permissible for market related contracts provided all the requirements set out in Guidance Note AGN 112.3 Netting 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 Capital Adequacy (Licensed ADI) 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 28(b)(ii)-(vi) in Prudential Standard APS 222 Associations with Related Entities 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 28(b)(ii)-(vi) in Prudential Standard APS 222 Associations with Related Entities 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 locally incorporated banks and locally-incorporated non-bank ADIs (including Specialist Credit Card Institutions (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. 1. Name of entity Report in column 1 the names of the relevant individual ELE-eligible subsidiaries to which the ADI has exposures to. 2. 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. 2.1. 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 (see Prudential Standard APS 111 Capital Adequacy: Measurement of Capital). 2.2. 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 (see Prudential Standard APS 111 Capital Adequacy: Measurement of Capital); · exposures to the extent that they are secured by cash deposits (subject to satisfying the criteria set out in Attachment B to Guidance Note AGN 112.1 Risk-Weighted On-Balance Sheet Credit Exposures); · exposures to the extent that they are guaranteed by governments, or secured by government securities (subject to satisfying the conditions set out in paragraphs 9, 12, 13, 14 and 15 of Guidance Note AGN 112.1 Risk-Weighted On-Balance Sheet Credit Exposures); · 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 · This includes all commitments, whether revocable or not, which have been advised to the subsidiary reported in column 1 (see Attachment A to Guidance Note AGN 112.2 Risk-Weighted Off-Balance Sheet Credit Exposures 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 (see Guidance Note AGN 112.2 Risk-Weighted Off-Balance Sheet Credit Exposures 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 Guidance Note AGN 112.2 Risk-Weighted Off-Balance Sheet Credit Exposures or Guidance Note AGN 112.3 Netting where netting applies. Netting by novation and close-out netting are permissible for market related contracts provided all the requirements set out in Guidance Note AGN 112.3 Netting for bilateral netting are met. 4. Total exposures This represents the total of column numbers 2.1, 2.2, 3.1 and 3.2.
5. 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 Specialist Credit Card Institutions (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 B to Guidance Note AGN 112.1 Risk-Weighted On-Balance Sheet Credit Exposures); · exposures to the extent that they are guaranteed by governments, or secured by government securities (subject to satisfying the conditions set out in paragraphs 9, 12, 13, 14 and 15 of Guidance Note AGN 112.1 Risk-Weighted On-Balance Sheet Credit Exposures); · 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 · This includes all commitments, whether revocable or not, which have been advised to the entity reported in column 1 (see Attachment A to Guidance Note AGN 112.2 Risk-Weighted Off-Balance Sheet Credit Exposures 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 (see Guidance Note AGN 112.2 Risk-Weighted Off-Balance Sheet Credit Exposures 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 Guidance Note AGN 112.2 Risk-Weighted Off-Balance Sheet Credit Exposures or Guidance Note AGN 112.3 Netting where netting applies. Netting by novation and close-out netting are permissible for market related contracts provided all the requirements set out in Guidance Note AGN 112.3 Netting for bilateral netting are met. 4. Total exposures This represents the total of column numbers 2, 3.1 and 3.2. Note on References to Accounting Standards This Note is about references in these instructions to an accounting standard or accounting standards, e.g. where the instructions say that something must be done in accordance with a particular AASB or international accounting standard, or must be done in accordance with the accounting standards (however described) generally. Where you see such a reference, you must read it as meaning the version of the accounting standard, or versions of the accounting standards, applying to reporting periods (within the meaning of the accounting standards) beginning immediately before 1 January 2005. Accordingly, the new AASB standards for 2005 are not to be applied. Similarly, a reference to principles or conventions (however described) governing an accounting procedure or treatment shall be taken to refer to principles or conventions applicable in relation to reporting periods (within the meaning of the accounting standards) that began immediately before 1 January 2005.
[1] 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.
3 Extracted from ICAA Members' Handbook December 2001 issue, AASB 1024.
