APRA releases draft capital adequacy changes for ADI's and general insurers

The Australian Prudential Regulation Authority (APRA) has released details of proposed changes to capital requirements for authorised deposit-taking institutions (ADIs) (draft Prudential Standards APS 110 Capital Adequacy and APS 111 Capital Adequacy: Measurement of Capital) and general insurers (GIs) and a discussion paper.

The proposed changes arise from the adoption of the Basel II Capital Framework in Australia, finalising APRA’s treatment of conglomerate groups containing one or more locally incorporated ADIs and responses to accounting and market developments since the standards were last updated.

APRA proposes to finalise and issue the ADI prudential standards in late 2007. They will have effect from 1 January 2008. Changes to capital requirements for GIs will be implemented in 2008.