More certainty for loss absorption provisions in regulatory capital

By Mark Standen

Earlier this month, the Treasury of the Australian government released a consultation paper on providing certainty for contractual loss absorption provisions in regulatory capital, seeking feedback on the need for legislative amendments to facilitate the effective operation of new prudential requirements on the loss absorbency of regulatory capital.

The proposed approach is consistent with existing provisions relating to the recapitalisation or restructure of the capital of an ADI, GI or LI under the relevant legislation. The Treasury has stated that the changes are intended to provide more certainty to market participants and APRA.

The closing date for submissions is 30 June 2014…

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