APRA to recommence issuing new banking licences

by Madison Utley11 Aug 2020

APRA has announced it will resume issuing new banking licences in September, after having instituted a temporary pause on doing so in April of this year.

The suspension was introduced not only to ensure APRA could dedicate more of its efforts to looking out for consumers, but because past experience has shown new market entrants struggle to succeed under normal economic conditions, let alone during the COVID-19 environment.   

“In January this year, APRA published an ambitious policy agenda. The onset of COVID-19 necessitated the suspension of many of APRA’s policy and supervision priorities until end-September,” explained APRA Chair Wayne Byres.

“This enabled regulated entities to allocate time and resources to manage their own operational challenges in response to the crisis, as well as supporting their customers through this period of significant economic uncertainty. It also allowed APRA to redeploy its resources to monitoring and responding to the impact of the rapidly changing environment.”

However, APRA believes some of the more “acute challenges” for new market entrants have abated.

“We now believe we can restart both policy consultations and licensing activity,” said Byres.

The regulator’s recommencement of assessing and issuing new banking licences will occur in two phases, with the first starting in September 2020 and the second in March 2021.

During phase one, new licences will be issued to applicants which are branches or subsidiaries of foreign entities and as such, have significant financial resources and a strong operational track record in a similar business.

APRA will also accept new licence applications from any entity starting September 2020.

Over phase two, from March next year, APRA is aiming to issue new licences to any entity that meets the relevant prudential requirements.

In the meantime, the regulator also shared it is reviewing the current pathways to obtaining an ADI licence, including the Restricted ADI licensing framework launched in 2018.