One quarter of APRA entities in some sort of strife

Almost a quarter of supervised financial institutions slipped from a "normal" risk assessment over the last year to a more intrusive stance, the latest Insight publication from the Australian Prudential Regulation Authority shows.

The data does not distinguish between deposit-taking entities and other supervised entities including insurance companies and superannuation funds.

Still, of the 890 entities rated as "normal" under APRA's rating system in 2007 almost a quarter, or 202 entities, slipped into a less favourable supervision category.

Almost half of this latter group in fact exited the financial services industry, though most likely these were superannuation funds and maybe a few credit unions forced into mergers.

Most of the remainder APRA now classifies as "oversight".

Of 414 entities rated as oversight in 2007 about half remain in that class. Another 120 returned to normal while 57 entities were forced to close or merge.

The ratings are derived from APRA's Probability and Impact Rating System, a tool introduced seven years ago to assist the financial regulator monitor regulated entities.

APRA said it conducted 2171 PAIRS assessments across 1227 institutions over two years.