The Australian Prudential Regulation Authority (APRA) has published an information paper outlining stronger requirements for being granted a banking licence, and closer supervision of new entrants as they seek to establish themselves.
The revised approach to licensing and supervising new authorised deposit-taking institutions (ADIs) follows a review of APRA’s ADI licensing regime aimed at incorporating learnings since the launch of the Restricted ADI licensing pathway in 2018. The review found the approach needed a greater focus on longer-term sustainability, rather than the short-term ambition of receiving a licence.
Among the changes outlined in the information paper:
• Restricted ADIs must achieve a limited launch of both an income-generating asset product and a deposit product before being granted an ADI licence;
• There is increased clarity around capital requirements at different stages for new entrants, aimed at reducing volatility in capital levels and facilitating a transition to the methodology for established ADIs over time; and
• New entrants are expected to have more advanced planning for a potential exit, including a focus on the return of deposits as an option.
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Author: David Jacobson
Principal, Bright Corporate Law
About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.