Improving the effectiveness of Additional Tier 1 capital instruments
This page contains relevant information regarding APRA's review of the effectiveness of Additional Tier 1 (AT1) capital instruments for use in a potential bank stress scenario.
December 2024
On 9 December 2024, APRA released a letter to industry providing an update on APRA’s consultation on a more effective capital framework for a crisis. The letter confirms that APRA is proceeding with its proposal to replace AT1 Capital in the bank prudential framework with more reliable and effective forms of capital, sets out transition arrangements, and summarises next steps.
The letter to industry and non-confidential submissions to APRA’s September 2024 Discussion Paper are available below.
Media release: APRA to phase out AT1 as eligible bank capital.
Letter
A more effective capital framework for a crisis: Update
Submissions
September 2024
On 10 September 2024, APRA released a discussion paper that outlines potential amendments to APRA’s prudential framework to ensure that the capital strength of the Australian banking system operates more effectively in stress. This includes proposing to replace bank-issued AT1 capital instruments, often referred to as ‘hybrid’ capital bonds, with more reliable and effective forms of regulatory capital.
APRA is seeking feedback on the framework design, expected impacts, and other implementation considerations relevant to the proposed approach.
Written submissions should be sent by 8 November 2024.
The discussion paper is available below:
Discussion paper
A more effective capital framework for a crisis
Submissions
September 2023
On 21 September 2023, APRA released a discussion paper on the challenges of using AT1 capital instruments, often referred to as “hybrid” capital bonds, in a potential bank stress scenario in an Australian context.
APRA has called for feedback on a range of potential options to overcome these challenges and improve the effectiveness of AT1 capital instruments.
Written submissions should be sent by 15 November 2023.
The discussion paper is available below:
Discussion paper
Enhancing bank resilience: Additional Tier 1 Capital in Australia
Note on submissions
It is APRA's policy to publish all submissions on the APRA website unless the respondent specifically tells APRA in writing that all or part of the submission is to remain confidential. An automatically generated confidentiality statement in an email does not satisfy this purpose. If you would like only part of your submission to be confidential, you should provide this information marked as 'confidential' in a separate attachment.
Submissions may be the subject of a request for access made under the Freedom of Information Act 1982 (FOIA). APRA will determine such requests, if any, in accordance with the provisions of the FOIA. Information in the submission about any APRA-regulated entity that is not in the public domain and that is identified as confidential will be protected by section 56 of the Australian Prudential Regulation Authority Act 1998 and will therefore be exempt from production under the FOIA.