House of Representatives
Financial Sector Legislation Amendment (Crisis Resolution Powers and Other Measures) Bill 2017
Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Scott Morrison MP)In this context, FMI refers to critical FMI in the form of market operators and clearing and settlement facilities
Foreign ADIs are not permitted to accept retail deposits in Australia, which generally prevents them from accepting initial deposits smaller than $250,000 from individuals.
Non-viability trigger events are described in Prudential Standard APS 111 Capital Adequacy - Measurement of Capital, Prudential Standard GPS 112 Capital Adequacy - Measurement of Capital, and Prudential Standard LPS 112 Capital Adequacy - Measurement of Capital. For example, for a capital instrument issued by an ADI incorporated in Australia, a non-viability trigger event is:
- (a)
- the issuance of a notice in writing by APRA to the ADI that conversion or write-off of capital instruments is necessary because, without it, APRA considers that the regulated entity would become non-viable; or
- (b)
- a determination by APRA, notified to the regulated entity in writing, that without a public sector injection of capital, or equivalent support, the regulated entity would become non-viable.
See for example Prudential Standard APS 111 Capital Adequacy - Measurement of Capital, Attachments F and J.
The 'resolution period' where the trigger event for the stay provision is appointment of a statutory or judicial manager, or recapitalisation under a statutory or judicial manager, will continue to be the period from the trigger event to the end of the next business day. If the trigger event relates to a compulsory transfer of business, the resolution period will continue to be the period from the trigger event to just after a certificate of transfer comes into force, unless APRA is satisfied it will not issue a certificate and declares an early end to the resolution period.
Note that foreign ADIs are not permitted to accept retail deposits in Australia, which generally prevents them from accepting initial deposits smaller than $250,000 from individuals.
As noted above, the fact that APRA has the ability to seek the appointment of a liquidator or provisional liquidator does not preclude it from exercising its other crisis management powers, including appointing or seeking the appointment of a statutory or judicial manager, in appropriate circumstances, whether or not the entity is insolvent.