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(From Reinsurance)
The Australian Prudential Regulation Authority (APRA) has released the second of two discussion papers setting out its proposed prudential response to the adoption of International Financial Reporting Standards (IFRS) by APRA-regulated institutions.
The paper deals with the treatment of eligible Tier 1 capital instruments and securitisation for authorised deposit-taking institutions (ADIs) and general insurers.
APRA is proposing to de-couple the definition of capital instruments eligible for Tier 1 capital from Australian accounting standards. At the same time, it is proposing to harmonise its approach to innovative capital instruments with the decisions of the Basel Committee on Banking Supervision and regulatory practice in major jurisdictions.
APRA has also taken the opportunity to introduce more flexibility into its approach to innovative capital by allowing innovative Tier 1 capital instruments to be issued directly and removing the requirement that directly issued instruments be subject to mandatory conversion.
These ...