APRA stands firm on inter-bank subordinated securitisation holdings

Proposed changes to the Australian Prudential Regulation Authority (APRA)'s APS120 relating to the capital treatment banks' holdings of subordinated securitisation tranches have been left broadly unchanged following a consultation period. The regulator rejected suggestions that its existing powers are sufficient to deal with subordinated holdings, and that subordination be defined by ratings rather than position in a securitisation's capital structure.