PET - Plain English Taxonomy

Label:	Financial Risk Exposures Off Balance Sheet Non Market Related Net APS 221 Amount
TREF ID:	DE8319
Data Type:	xbrli:monetaryItemType
Period Type:	instant
Balance Type:	debit
Business Description & Guidance:	This is the value, as at the relevant date, of non-market-related off-balance sheet exposures, as determined in accordance with Prudential Standard APS 221.This includes all contingencies and commitments, whether revocable or not, which have been advised to the counterparty. Any potential chargeback exposures to the counterparty arising from credit card acquiring activities should also be included. Exclude internal limits that have not been formally advised to the counterparty or group of related counterparties and may be cancelled at the reporting party's discretion.The value of all unused commitments to the counterparty (do not apply credit conversion factors or risk weightings to the value) is to be reported on a net basis, i.e. net of exposures excluded under APS 221, specifically: - exposures deducted from the ADI's capital (refer APS 111); - exposures to the extent that they are secured by cash deposits (subject to satisfying the criteria in APS 112); - exposures to the extent that they are guaranteed by, or secured against securities issued by, governments or central banks (subject to satisfying the conditions in APS 112); - exposures arising in the course of settlement of market-related contracts; - exposures to an ADI required as part of a liquidity support arrangement that has been certified by APRA under section 11CB of the Banking Act 1959; and - exposures to the extent that they have been written off or specifically provided for.Exposures arising from repos (i.e. sale and repurchase agreements) and reverse repos (i.e. purchase and resale agreements) of securities should be reported as exposures to the issuer of the securities and collateralised loans to the counterparty respectively.Off-balance sheet refers to assets or liabilities that are not recognised or recorded on the statement of financial position of the reporting party because they do not satisfy the asset or liability accounting recognition requirements.

Usage

Form	Labels
ARF_221_0_C	Label: Guidance:	Off-Balance Sheet Exposures - Non-Market Related (Commitments and Contingencies) ADIs that are engaged in credit card acquiring activities should use their own methodology in determining the amount of potential chargeback exposures to the counterparty (e.g. this could be based on the ADI's historical trends of chargeback exposures to the counterparty). For SCCIs, any funds held as performance bond from merchants for settling any outstanding liabilities to the reporting SCCI (e.g. reimbursement for merchant chargebacks) must be placed in a trust account with an ADI authorised to accept deposits to be eligible for netting purposes. For large exposures reporting, credit derivatives should be reported in the same way as guarantees, irrespective of whether they are held in an ADI's trading book or banking book. This means, where an ADI is deemed by the requirements set down in APS 112 as having purchased protection on an underlying exposure using a credit derivative, the exposure is to the protection seller of the credit derivative. Where an ADI has sold protection using a credit derivative, the exposure is to the reference entity underlying the credit derivative. In all cases, exposures are to be reported at their gross values, where gross value is the amount of the exposure as defined in APS 112. For credit derivatives in an ADI's trading book, this requirement differs to APRA's capital adequacy arrangements, which treat credit derivatives in the same way as market rate related transactions. The requirement is, however, consistent with how APRA requires other non-market rate related transactions to be incorporated into the large exposures reporting framework. The treatment of large exposures where protection is purchased requires some additional clarification in a couple of instances. Where an ADI has purchased protection using a credit derivative and the residual maturity of the credit derivative contract is less than the maturity of the underlying asset, the exposure is to the protection seller for the term of the credit derivative hedge and to the underlying exposure thereafter. Amongst other requirements, the credit derivative would need to have a residual maturity of at least one year to be regarded by APRA as a sufficient hedge. In the case of currency mismatches, that is, where the underlying exposure and the credit derivative hedge are denominated in different currencies, the proportion of the underlying exposure transferred to the protection seller will be determined by the current market exchange rate.
ARF_221_0_L	Label: Guidance:	Off-Balance Sheet Exposures - Non-Market Related (Commitments and Contingencies) ADIs that are engaged in credit card acquiring activities should use their own methodology in determining the amount of potential chargeback exposures to the counterparty (e.g. this could be based on the ADI's historical trends of chargeback exposures to the counterparty). For SCCIs, any funds held as performance bond from merchants for settling any outstanding liabilities to the reporting SCCI (e.g. reimbursement for merchant chargebacks) must be placed in a trust account with an ADI authorised to accept deposits to be eligible for netting purposes. For large exposures reporting, credit derivatives should be reported in the same way as guarantees, irrespective of whether they are held in an ADI's trading book or banking book. This means, where an ADI is deemed by the requirements set down in APS 112 as having purchased protection on an underlying exposure using a credit derivative, the exposure is to the protection seller of the credit derivative. Where an ADI has sold protection using a credit derivative, the exposure is to the reference entity underlying the credit derivative. In all cases, exposures are to be reported at their gross values, where gross value is the amount of the exposure as defined in APS 112. For credit derivatives in an ADI's trading book, this requirement differs to APRA's capital adequacy arrangements, which treat credit derivatives in the same way as market rate related transactions. The requirement is, however, consistent with how APRA requires other non-market rate related transactions to be incorporated into the large exposures reporting framework. The treatment of large exposures where protection is purchased requires some additional clarification in a couple of instances. Where an ADI has purchased protection using a credit derivative and the residual maturity of the credit derivative contract is less than the maturity of the underlying asset, the exposure is to the protection seller for the term of the credit derivative hedge and to the underlying exposure thereafter. Amongst other requirements, the credit derivative would need to have a residual maturity of at least one year to be regarded by APRA as a sufficient hedge. In the case of currency mismatches, that is, where the underlying exposure and the credit derivative hedge are denominated in different currencies, the proportion of the underlying exposure transferred to the protection seller will be determined by the current market exchange rate.

Form

Labels

ARF_221_0_C

Label:

Guidance:

Off-Balance Sheet Exposures - Non-Market Related (Commitments and Contingencies)
ADIs that are engaged in credit card acquiring activities should use their own methodology in determining the amount of potential chargeback exposures to the counterparty (e.g. this could be based on the ADI's historical trends of chargeback exposures to the counterparty).

For SCCIs, any funds held as performance bond from merchants for settling any outstanding liabilities to the reporting SCCI (e.g. reimbursement for merchant chargebacks) must be placed in a trust account with an ADI authorised to accept deposits to be eligible for netting purposes.

For large exposures reporting, credit derivatives should be reported in the same way as guarantees, irrespective of whether they are held in an ADI's trading book or banking book. This means, where an ADI is deemed by the requirements set down in APS 112 as having purchased protection on an underlying exposure using a credit derivative, the exposure is to the protection seller of the credit derivative. Where an ADI has sold protection using a credit derivative, the exposure is to the reference entity underlying the credit derivative. In all cases, exposures are to be reported at their gross values, where gross value is the amount of the exposure as defined in APS 112. For credit derivatives in an ADI's trading book, this requirement differs to APRA's capital adequacy arrangements, which treat credit derivatives in the same way as market rate related transactions. The requirement is, however, consistent with how APRA requires other non-market rate related transactions to be incorporated into the large exposures reporting framework.

The treatment of large exposures where protection is purchased requires some additional clarification in a couple of instances. Where an ADI has purchased protection using a credit derivative and the residual maturity of the credit derivative contract is less than the maturity of the underlying asset, the exposure is to the protection seller for the term of the credit derivative hedge and to the underlying exposure thereafter. Amongst other requirements, the credit derivative would need to have a residual maturity of at least one year to be regarded by APRA as a sufficient hedge. In the case of currency mismatches, that is, where the underlying exposure and the credit derivative hedge are denominated in different currencies, the proportion of the underlying exposure transferred to the protection seller will be determined by the current market exchange rate.

ARF_221_0_L

Label:

Guidance: