The Australian Prudential Regulation Authority (APRA) has released for consultation a response paper and a set of five draft prudential standards that give effect to the Basel III capital reforms in Australia. 

This package follows the release of a discussion paper in September 2011 on APRA’s approach to these global capital reforms, which will raise the level and quality of capital in the global banking system.  The response paper provides APRA’s comments on key issues raised in the 13 submissions it received in the first-round consultation. The five draft prudential standards are: (i) Prudential Standard APS 001 Definitions, which defines terms that apply across ADI prudential standards; (ii) Prudential Standard APS 110 Capital Adequacy, which sets out the overall Basel III capital framework, including minimum regulatory capital requirements and two new capital buffers; (iii) Prudential Standard APS 111 Capital Adequacy: Measurement of Capital, which provides details on the eligibility criteria for regulatory capital and on regulatory adjustments; (iv) Prudential Standard APS 160 Basel III Transitional Arrangements, which outlines transitional arrangements for non-complying capital instruments; and (v) Prudential Standard APS 222 Associations with Related Entities, which now includes Extended Licensed Entity requirements previously included in APS 110.