Changes Regarding The Use of AT1s In Australian Market
The Australian Prudential Regulation Authority (APRA) has confirmed it will phase out the use of Additional Tier 1 (AT1) capital instruments to simplify and improve the effectiveness of bank capital in a crisis.
“APRA intends to finalise changes to prudential standards before the end of 2025, with the updated framework to come into effect from 1 January 2027. Although APRA expects banks with surplus AT1 to replace it with Tier 2 Capital at their next call dates, APRA will consider requests to replace existing AT1 where the replacement does not increase the current level of AT1 capital instruments or extend call dates beyond 2032.”
Solactive will monitor the amendments of the framework and provide an update regarding the impact to the relevant indices.
For more information, please visit the following link for announcement from APRA:
https://www.apra.gov.au/news-and-publications/apra-to-phase-out-at1-as-eligible-bank-capital