Banking Act 1959

Part II - Provisions relating to the carrying on of banking business  

Division 2 - Protection of depositors  

Subdivision AA - Recapitalisation directions by APRA  

SECTION 13E   Recapitalisation direction by APRA  

(1)    
APRA may give an ADI a direction (a recapitalisation direction ) that requires the ADI to increase the ADI ' s level of capital to the level specified in the direction if:

(a) the ADI informs APRA that:

(i) the ADI considers that the ADI is likely to become unable to meet the ADI ' s obligations; or

(ii) the ADI is about to suspend payment; or

(b) APRA considers that, in the absence of external support:

(i) the ADI may become unable to meet the ADI ' s obligations; or

(ii) the ADI may suspend payment; or

(iii) it is likely that the ADI will be unable to carry on banking business in Australia consistently with the interests of the ADI ' s depositors; or

(iv) it is likely that the ADI will be unable to carry on banking business in Australia consistently with the stability of the financial system in Australia; or

(c) the ADI:

(i) becomes unable to meet the ADI ' s obligations; or

(ii) suspends payment.

(1A)    

Subsection (1B) applies if subsections 13D(3) and (4) apply to a NOHC/NOHC subsidiary because of a primary recapitalisation direction given to an ADI (as mentioned in subsection 13D(2)).

(1B)    

For the purposes of facilitating compliance with the primary recapitalisation direction, APRA may give the NOHC/NOHC subsidiary a direction (also a recapitalisation direction ) that requires the NOHC/NOHC subsidiary to do anything that is specified in the direction.

(2)    
In deciding whether to give a recapitalisation direction, APRA must consult with the Australian Competition and Consumer Commission (the ACCC ), unless the ACCC notifies APRA, in writing, that the ACCC does not wish to be consulted about:

(a) the direction; or

(b) a class of directions that includes the direction.

(3)    
The regulations may specify that a particular form of support is not external support for the purposes of paragraph (1)(b).

(4)    
A recapitalisation direction is not a legislative instrument.

(5)    

A recapitalisation direction may deal with the time by which, or period during which, it is to be complied with.

(6)    

APRA may, by notice in writing to the ADI, vary the recapitalisation direction if, at the time of the variation, it considers that the variation is necessary and appropriate.

(7)    

The direction has effect until APRA revokes it by notice in writing to the ADI. APRA may revoke the direction if, at the time of revocation, it considers that the direction is no longer necessary or appropriate.