Call for more power for APRA
(28 March 2008 – Australia) The Regulatory Council of Australia has called for greater regulatory power over banks in crisis for regulatory body APRA.
The Regulatory Council of Australia, which is made up of the RBA, APRA, ASIC and the Treasury, recommended legislative changes that give APRA greater authority.
The RBA said in its recently released Financial Stability Review that the changes would give a statutory manager appointed by APRA additional powers.
It would also provide APRA with greater flexibility in arranging a takeover by, or a transfer of assets and liabilities to, another Authorised Deposit-taking Institution (ADI) in a timely fashion.
The Council of Financial Regulators has recently been reviewing aspects of Australia’s arrangements for the management of a financial crisis.
In particular, the Council has focused on the case of the UK bank Northern Rock, which was the first bank run in the United Kingdom for around 130 years.
The Council saw that arrangements would be enhanced in Australia if a scheme was established that saw depositors paid in the event of a failed ADI in a timely fashion.
The primary issue is the waiting time, with emphasis on a scheme that does not delay in paying depositors.
The Council is working on an Early Access Facility, which would provide early repayment of up to $A20,000 per depositor in a failed institution; the RBA estimated that this cap is sufficient to cover the entire deposits of around 80 percent of depositors.
The RBA said in its recently released Financial Stability Review that the changes would give a statutory manager appointed by APRA additional powers.
It would also provide APRA with greater flexibility in arranging a takeover by, or a transfer of assets and liabilities to, another Authorised Deposit-taking Institution (ADI) in a timely fashion.
The Council of Financial Regulators has recently been reviewing aspects of Australia’s arrangements for the management of a financial crisis.
In particular, the Council has focused on the case of the UK bank Northern Rock, which was the first bank run in the United Kingdom for around 130 years.
The Council saw that arrangements would be enhanced in Australia if a scheme was established that saw depositors paid in the event of a failed ADI in a timely fashion.
The primary issue is the waiting time, with emphasis on a scheme that does not delay in paying depositors.
The Council is working on an Early Access Facility, which would provide early repayment of up to $A20,000 per depositor in a failed institution; the RBA estimated that this cap is sufficient to cover the entire deposits of around 80 percent of depositors.
Subscribe