APRA plans to remove ‘pillar 3’ disclosure requirements for most banks and ADIs from next year.

Instead, APRA will produce a new centralised publication of prudential metrics, which will provide market participants access to key prudential data points across all locally-incorporated ADIs in a way that is easier to compare and analyse than standalone individual disclosures, the prudential regulator said on Wednesday.

The proposed changes “will provide better disclosures for the larger, more complex banks and enable market participants to more easily compare ADI risk profiles and capital positions across the industry,” APRA said.

APRA said it had received feedback from market participants that ADI disclosures were “complex and difficult for market participants to use for analysis”.

APRA said it was revising its approach to ADI disclosure requirements, by simplifying the structure of the quarterly APS 330, and fostering the accessibility and comparability of ADI disclosures through the introduction of an APRA publication of key ADI prudential metrics, and proposing that “significant” ADIs publish their individual disclosures in machine-readable format.

Significant financial institutions, APRA said recently, are those with more than A$20 million in assets - a dozen or so entities (with the likes of AMP Bank at the lower end of the scale).

APRA said it considers that the costs of complying with APS 330 for smaller and foreign ADIs “outweighs the benefit of individual disclosures, given the APRA publication of key data in a centralised dashboard and the scale and complexity of these smaller ADIs”.

It could also have said the reliability and timeliness of these pillar 3 disclosure by many of the smallest ADIs was inconsistent, at best.

APRA deputy chair John Lonsdale said APRA “was driving greater transparency for the financial system, while minimising complexity for smaller entities”.

Smaller ADIs will be relieved of their current APS 330 reporting requirements from January 2023.  The disclosure requirements for large banks will take effect from 2024.

Separately, APRA said it plans to undertake an international capital comparison study in 2023. The study will develop a methodology to harmonise capital ratios under APRA’s framework with international peers.