The Banking Executive Accountability Regime (Size of an Authorised Deposit-taking Institution) Determination 2021 has been registered. It sets out the methodology to determine the size of an authorised deposit-taking institution (ADI) as small, medium or large, by considering the total assets of the ADI as reported to the Australian Prudential Regulation Authority (APRA).

The Banking Executive Accountability Regime (BEAR) requires ADIs to defer an accountable person’s remuneration in certain circumstances; the amount deferred depends on the size of the ADI where the accountable person works.

The BEAR also includes civil penalties when an ADI fails to meet its obligations under the BEAR. The maximum penalty that may be applied by a court is also determined with reference to the size of the ADI.

The 2021 Determination 2021 provides that:

• A small ADI is an ADI that has a total asset size less than or equal to $10 billion, or a new ADI for which it is not yet possible to work out this amount because they have not yet submitted a final report to APRA (for example a new ADI);
• A medium ADI is an ADI that has a total asset size greater than $10 billion but less than $107 billion;
• A large ADI is an ADI that has a total asset size greater than or equal to $107 billion.
  
  Each of these monetary amounts is a threshold demarcating size categories. Each amount is indexed .

The size of an ADI is calculated on the first day of each financial year. The size category will then apply to that ADI for the duration of that financial year. Due to the fact that a final report is lodged in the year following the year to which the report relates, there is a lag between the financial year that a final report covers, and the financial year to which a designation of size based on that final report, and any previous final reports, applies.

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Author: David Jacobson
Principal, Bright Corporate Law
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About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.