On 26 June 2013, the Australian Prudential Regulation Authority (APRA) released the new Prudential Standard APS 330 Public Disclosure. The prudential standard, which is legally binding, requires locally incorporated authorised deposit-taking institutions to publicly disclose information on their risk profile, risk management, capital adequacy, capital instruments and remuneration practices. Following the global financial crisis, concerns were raised regarding the transparency of regulatory capital (ie the capital an authorised deposit-taking institution is required to hold) and market discipline. Specifically, the following factors were identified as contributing to market uncertainty during the crisis and exacerbating a loss of market confidence in authorised deposit-taking institutions operating overseas:
- insufficient disclosure requirements and the absence of a standard approach for reporting regulatory capital, making it difficult to evaluate an authorised deposit-taking institution’s capital position; and
- remuneration practices which may have encouraged unsound risk‑seeking behaviour.
In response to these issues, the Basel Committee on Banking Supervision published Composition of capital disclosure requirements (June 2012) and Pillar 3 disclosure requirements for remuneration (July 2011). APRA’s new prudential standard gives effect to these measures, enhancing the public disclosure by authorised deposit-taking institutions in Australia of their capital positions and remuneration practices. A Regulation Impact Statement was prepared by APRA and assessed as adequate by the Office of Best Practice Regulation.
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