The Australian Prudential Regulation Authority (APRA) has published a discussion paper consulting on changes to embed greater proportionality in the banking prudential framework by formalising a three-tier classification of banks, including credit unions and building societies. The proposal would introduce a new tier of Most Significant Financial Institutions (MSFIs) for banks with more than $300 billion in assets, which would currently include the four major banks and Macquarie Bank. A second tier would cover all other significant financial institutions (SFIs), with the SFI threshold increased from $20 billion to $30 billion, while the third tier would consist of non-SFIs. Under the approach, non-SFIs would receive additional time to comply with new or revised prudential requirements where appropriate, and any bank moving up a tier would be granted a transition period of at least 12 months to meet higher settings. APRA has set a three-month consultation period and expects to finalise the proposals in 2026.
Australian Prudential Regulation Authority 2025-12-05
Australian Prudential Regulation Authority consults on three-tier banking prudential framework with new Most Significant Financial Institutions tier above $300 billion
The Australian Prudential Regulation Authority (APRA) is consulting on a discussion paper to enhance proportionality in the banking prudential framework by introducing a three-tier classification system for banks, including credit unions and building societies. The proposal includes a new tier for Most Significant Financial Institutions (MSFIs) with assets over 300 billion AUD, adjusts the threshold for Significant Financial Institutions (SFIs) to 30 billion AUD, and provides transition periods for banks changing tiers.