APRA to take the pause button off bank licences

  • By Christine St Anne

The prudential regulator will kick-start a phased approach to issuing new licenses as well as re-start its policy reform agenda.

In March, APRA announced the suspension of the majority of its planned policy and supervision initiatives in response to the impact of COVID-19.

This was followed up in April when it announced it would suspend the issuing of new licences due to the economic uncertainty – a move that was criticized for stifling innovation.

The granting of new banking, insurance and superannuation licences will start in two phases, with phase one starting in September 2020 and phase two in March 2021.

Better-resourced firms will be favoured in the revised timeline.

New licences issued during phase one will be issued to applicants that are branches or subsidiaries of foreign entities with significant financial resources and a strong operational track record in a similar business.

APRA will also accept new licence applications from any firm from September 2020.

From March 2021, APRA envisages new licences may be issued to any firm that meets the relevant prudential requirements.

APRA is also reviewing the pathways to an ADI licence, including the Restricted ADI licensing framework that was launched in 2018, to include experiences to date, while continuing to support competition in the sector.

While it has re-started its policy agenda, APRA narrow its policy priorities for the remainder of the year, focusing on a number of f high-priority prudential policy reforms.

The policy reforms that will begin again through public consultation include the cross-industry prudential standard for remuneration and bank capital reforms that also include APRA’s unquestionably strong framework, Basel III and measures to improve transparency, comparability and flexibility.

The prudential regulator said that is policy program next year will continue to be reviewed in light of the current environment, and with a view to continuing to support the financial sector as it responds to the impact of COVID-19.