International Law

In his opening statement to the Senate Standing Committee on Economics on 25 February 2009 APRA Chair John Laker gave a brief update on the global financial crisis and its implications for the work and priorities of APRA.

In a positive view of banks, building societies and credit unions he said:

In the face of weaker economic conditions in Australia, APRA's key focus over 2009 will be on the core strength of our supervised financial institutions -- that is, on their capital. Having weathered choppy financial seas for over 18 months, our institutions are now beating into headwinds from the real economy. Nonetheless, provided they remain close-hauled --in APRA's terms, prudently managed and well-capitalised -- there is no reason why our institutions cannot continue to make good headway.

For our authorised deposit-taking institutions -- banks, building societies and credit unions -- our main priorities in 2009 are credit quality and capital strength; our earlier concerns about liquidity and funding have eased somewhat. The level of problem loans has been rising (though from a low base) and is broadening beyond the high-profile names that have dominated the data. We are monitoring a range of indicators of credit quality, including institutions' own `watchlists', with a particular focus on commercial property exposures. We are also reviewing capital management plans and potential access to capital, which has become a very scarce commodity in banking systems globally. The success of recent capital raisings by our larger banks is testament to the strong standing of the Australian banking system.

He also commented on APRA's supervision of the life and general insurance and superannuation industries.