APRA has released an information paper on its framework for dealing with domestic systemically important banks (D-SIBs) in Australia.

Banks identified as D-SIBs have higher loss absorbency (HLA) capital requirements.

Based on size, interconnectedness, substitutability and complexity, APRA has determined that the following authorised deposit-taking institutions are D-SIBs:
•Australia and New Zealand Banking Corporation
•Commonwealth Bank of Australia
•National Australia Bank
•Westpac Banking Corporation.

The HLA capital requirement for D-SIBs is intended to reduce the probability of failure compared to non-systemic institutions, reflecting the greater impact a D-SIB failure is expected to have on the domestic financial system and economy.

The D-SIB framework in Australia focuses only on the larger banks. Other authorised deposit-taking institutions (ADIs), such as smaller banks, credit unions and building societies lack the scale and scope of banking activities to be considered within a D-SIB framework.

The D-SIB framework will come into effect from 1 January 2016.