Authorised deposit-taking institutions’ Committed Liquidity Facility allocations have fallen to A$33 billion and the phasing out of the CLF by the end of the year is on schedule, APRA said yesterday.

CLF allocations have fallen from $102 billion in January to $66 billion in May and now $33 billion.

In September last year, APRA told ADIs subject to the liquidity coverage ratio rule that it wanted them to reduce their use of the CLF to zero by the end of 2022. It instructed ADIs to purchase sufficient high-quality liquid assets to eliminate the need for the CLF. 

APRA said that it and the Reserve Bank had determined that, with the significant increase in government and semi-government bond issuance, there were sufficient high quality liquid assets for ADIs to meet their LCR requirements without the need for the CLF.

At the time of the announcement, ANZ had an estimated A$11 billion of CLF balances, Commonwealth Bank $30 billion, NAB $31 billion and Westpac $37 billion. 

The phasing out of CLF has had a significant impact on bank margins. Westpac reported in May that in response to APRA’s directive it increased its holdings in high-quality liquid assets from $148.6 billion at the end of September last year to $161.9 billion at the end of March.

The increase in low-yielding liquid assets contributed 8 basis points to the fall in the bank’s net interest margin in the March half-year.