Investor Presentaiton
Macquarie | Presentation to Investors and Analysts I macquarie.com
Regulatory
update
Australia
Overview of Macquarie
Operating Groups
3Q20 Update
Outlook
Appendix
⚫ APRA is currently undertaking regulatory reviews in a number of areas, including:
- Finalisation of Basel III - APRA is still finalising rules for Australian banks to ensure that their capital levels can be considered
'unquestionably strong"¹
- In Dec 19, APRA noted that it is giving consideration to the introduction of a non-zero default level for the countercyclical capital buffer (CCYB),
as part of its broader reforms to the ADI capital framework²
- In Dec 19, APRA released final standards on Operational Risk (APS 115), with the key update to the Jun 19 draft standards being confirmation
of a 1 Jan 21 implementation date³
- In Oct 19, APRA released its draft standards relating to APS 111, including changes to the capital treatment of investments in banking and
insurance subsidiaries, with implementation from 1 Jan 21.
-In Sep 19, APRA commenced a second consultation on capital calculation and risk management requirements relating to Interest Rate Risk in the
Banking Book5
- Loss-absorbing capacity (LAC) - APRA released a 'response to submissions' paper in Jul 19 outlining its approach for LAC to support the orderly
resolution of Australian ADIs6
- APRA has confirmed that MBL will be subject to additional LAC requirements, consistent with the approach for the major banks
In Jan 19, the Basel Committee on Banking Supervision (BCBS) released revisions to the market risk framework7, with implementation from 1 Jan
22. APRA is yet to release draft standards
In Nov 18, APRA released draft prudential standards on its implementation of a minimum requirement for the leverage ratio of 3.5% expected to
be effective from 1 Jan 228. MBL's APRA leverage ratio was 5.3% at 31 Dec 19
In Aug 18, APRA released a discussion paper setting out potential options to improve the transparency, international comparability and flexibility of
the capital framework. The proposals are not intended to change the amount of capital that ADIs are required to hold⁹
• As previously noted, APRA is in discussions with Macquarie on resolution planning and intragroup funding. These discussions are progressing and
Macquarie will continue working on these initiatives in consultation with APRA.
• Based on the current information available, it is Macquarie's expectation that it will have sufficient capital to accommodate likely additional regulatory
Tier 1 capital requirements as a result of the above changes, noting that some of them are at an early stage of review and hence the final impact is
uncertain
• In Jul 19, APRA released a draft prudential standard CPS 511 aimed at clarifying and strengthening remuneration requirements in APRA-regulated
entities. A three-month consultation period closed 23 Oct 2019 during which Macquarie lodged its submission. APRA is yet to release final
prudential standards
⚫ In Jan 20, consistent with the Royal Commission recommendations, Federal Treasury released a proposals paper outlining its plan to extend BEAR
to a new regime, FAR (Financial Accountability Regime) to include all APRA regulated entities. In a similar way to BEAR impacting ADIS, FAR will
add a personal accountability regime to insurers and responsible superannuation entities. Treasury has commenced the consultation process and
called for submissions by 14 Feb 2020. Macquarie is participating in the process and will make a submission
O
MACQUARIE
1. 'Revisions to the capital framework for ADIs'; 14 Feb 18; 'APRA responds to first phase of consultation on revisions to ADI capital framework'; 17 Jun 19. 2. 'APRA flags setting countercyclical capital buffer at
non-zero default level'; 11 Dec 2019. 3. 'APRA finalises updated prudential standard on operational risk requirements for ADIs', 11 Dec 2019. 4. 'Revisions to APS 111 Capital Adequacy: Measurement of Capital';
15 Oct 19. 5. 'Response to submissions: Interest rate risk in the banking book for authorised deposit-taking institutions'; 4 Sep 19. 6. 'Response to submissions - loss-absorbing capacity'; 9 Jul 19. 7. 'Minimum
capital requirements for market risk'; 14 Jan 19. 8. 'Draft Prudential Standard APS 110 Capital Adequacy' and 'Response to submissions: Leverage ratio requirement for ADIs'; 27 Nov 18. 9. 'Improving the
transparency, comparability and flexibility of the ADI capital framework'; 14 Aug 18.
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