Regulatory AlertsAPS 121 Covered Bonds
The Australian Prudential Regulation Authority issued Prudential Standard APS 121 to require authorised deposit-taking institutions to adopt policies and procedures for managing risks associated with issuing covered bonds. The standard mandates that ADIs maintain prescribed capital treatments for exposures linked to covered bond special purpose vehicles and establish robust governance frameworks for cover pool management. It further imposes strict reporting obligations, including notifications when cover pool assets exceed 8 percent of an ADI's Australian assets, and defines specific rules for asset qualification and default provisions.
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