APRA looks to property exposure for signs of weakness
The chairman of the Australian Prudential Regulation Authority (APRA) has pointed to the commercial property exposures of banks, building societies and credit unions as a key indicator of credit quality.
During his appearance before the Senate Standing Committee on Economics, APRA chairman John Laker said the regulator’s key focus over 2009 would be on the core strength of the financial institutions it supervises.
For authorised deposit-taking institutions (banks, building societies and credit unions), Laker said APRA’s main priorities for 2009 would be credit quality and capital strength, with the regulator’s “earlier concerns about liquidity and funding” having eased somewhat.
Laker said APRA is monitoring a range of indicators of credit quality, “with a particular focus on commercial property exposures” along with capital management plans and potential access to capital.
Laker said the level of problem loans has been rising and is “broadening beyond the high-profile names that have dominated the data”.
Meanwhile, APRA has also established a team to closely monitor life insurance capital.
“We have recently asked insurers to carry out additional detailed stress tests to ensure that the consequences of any further market deterioration are well understood and appropriate contingency plans put in place,” Laker said.
Since the global financial crisis began, life insurers have taken a number of steps to fortify their businesses and reduce their exposure to falling asset values, Laker said, adding that the life insurance industry “remains in a generally sound position”.
Recommended for you
Investment executives say the benefits of real assets for client portfolios can “absolutely” outweigh the illiquidity risk, provided there is a good understanding of its risks and returns and of client goals.
Fund manager GSFM has appointed a key account manager for Queensland, following the appointment of a head of retail distribution last month.
The struggle to recruit specialist expertise in alternative asset classes means senior analyst salaries are surpassing $200,000 as fund managers compete for talent, observes Kaizen Recruitment.
TWC Investment Management, which launched in September, has unveiled a long-only equity fund targeting global wealth creator stocks.
