(25 February 2008 – Australia) APRA has warned all institutions to ensure the value of their assets is ‘realistic’ amidst the falling provisions for bad debts in the current credit crisis.Australian Prudential Regulation Authority chairman John Laker said that there were still doubts over whether offshore losses had been full identified and made transparent to investors.
Laker said that APRA wrote to Australia’s ADIs (authorised deposit-taking institutions) late last week pointing out to them the importance of appropriate valuation of some of the assets they have been holding in light of the turbulent market conditions.
He has requested detailed plans on how these institutions planned to finance their operations for the upcoming 12 months.
We certainly do not want our institutions to ignore the reality that markets have moved a long way from prices they may have been hoping to get for assets six or nine months ago, he added.
However, Dr Laker pointed out that Australian institutions were in good shape to deal with the current market uncertainty because, unlike in the US, the books of institutions were in good shape.