Capital Adequacy & Provisions : APRA & IFRS

How does the APRA approach to IFRS differ to that adopted by the Irish regulator?

I understand APRA have their own reporting standards which the banks must adhere to.

These is separate to their financial accounts and do not conform to IFRS because APRA believe IFRS is inadequate for monitoring capital adequacy.

theaustralian.news.com.au/bu … 43,00.html
apra.gov.au/media-releases/06_30.cfm
apra.gov.au/Media-Releases/06_20.cfm

4 months later and the Indo is cottoning on.

independent.ie/business/iris … 24457.html

In boom times would building up additional or ‘excessive’ reserves for loss provisions have been seen as profit-making banks trying to avoid tax on these profits?

Just a thought that crossed my mind a while back after I heard there were restrictions on loss provisions…

I’m not sure what the espoused reasons for the IFRS treatment of provisions were but the practical implications were that the banks could lend out more money while remaining compliant. That’s why countries like Australia and Spain implemented their own controls and ignored the IFRS treatment.

This IAS treatment was discussed in it’s non watered down format in 2001/2 when the Japanese situation was still fresh in the memory. It was a dumb ass proposal then, and it’s even more so now as law. It won’t last the next decade.

If it was handled properly or left the way it was, it could and should have brought the inherent banking problems forward at least 18 months or 2 years, into 2005/06. But then if this played out the big 4/5/6 wouldn’t make so much out of Nama/APS… 8-