APRA looks to property exposure for signs of weakness
The chairman of the Australian Prudential Regulation Authority (APRA) has pointed to the commercial property exposures of banks, building societies and credit unions as a key indicator of credit quality.
During his appearance before the Senate Standing Committee on Economics, APRA chairman John Laker said the regulator’s key focus over 2009 would be on the core strength of the financial institutions it supervises.
For authorised deposit-taking institutions (banks, building societies and credit unions), Laker said APRA’s main priorities for 2009 would be credit quality and capital strength, with the regulator’s “earlier concerns about liquidity and funding” having eased somewhat.
Laker said APRA is monitoring a range of indicators of credit quality, “with a particular focus on commercial property exposures” along with capital management plans and potential access to capital.
Laker said the level of problem loans has been rising and is “broadening beyond the high-profile names that have dominated the data”.
Meanwhile, APRA has also established a team to closely monitor life insurance capital.
“We have recently asked insurers to carry out additional detailed stress tests to ensure that the consequences of any further market deterioration are well understood and appropriate contingency plans put in place,” Laker said.
Since the global financial crisis began, life insurers have taken a number of steps to fortify their businesses and reduce their exposure to falling asset values, Laker said, adding that the life insurance industry “remains in a generally sound position”.
Recommended for you
Magellan Financial Group experienced $1 billion in net outflows during April but managed to offset this and report a rise in FUM, having also announced its fourth fund from its partnership with Vinva.
Having officially opened its doors, ETF Shares – led by three former Global X employees – has now launched its first three ETF vehicles on Cboe Australia for financial advisers.
First Sentier Investors has hired its incoming chief financial and strategy officer to drive growth, having also confirmed its entry into the Australian ETF market last month.
Platinum Asset Management has lost a near-$1 billion institutional mandate as data shows its funds under management fell below $10 billion in April.
