The Australian Prudential Regulation Authority (“APRA”) has released amendments to relevant prudential standards, prudential practice guides (“PPG”) and reporting forms to give effect to enhancements to the Basel II Framework in Australia. The Basel II Framework is a global capital regime that was introduced for authorised deposit‑taking institutions in Australia on 1 January 2008.  

The amendments are a response to a package of measures released by the Basel Committee on Banking Supervision in July 2009, and adjusted in June 2010. The changes to APRA's prudential standards include: (i) higher capital requirements to capture the credit risk of complex trading activities and the introduction of a stressed value-at-risk (VaR) requirement; (ii) higher risk-weights for so-called “resecuritisation” exposures to better reflect the risk inherent in these products, and increased credit conversion factors for short-term liquidity facilities provided to off-balance sheet conduits; and (iii) requirements in relation to valuation practices and the capture of off-balance sheet and securitisation activities; and 
increased disclosure requirements for securitisations and off-balance sheet exposures.