APRA closes the door on new banks
The Australian Prudential Regulation Authority (APRA) has suspended the issuance of any new banking licences for “at least six months” in response to the economic uncertainty created by COVID-19.
The regulator sent a letter to applicants currently waiting to receive licences explaining the “fundamental change” being felt both in Australia and abroad around the spreading virus.
In the correspondence, APRA highlighted that financial institutions, especially those that take customer deposits, occupy a “unique position of trust”.
“The financial safety of these institutions is key to the financial stability and well-being of the community and, as a result, these institutions are subject to higher standards than many sectors of the economy,” it read.
“This includes higher entry standards. The process of granting an APRA licence is intended to help ensure that a new entrant will be able to honour the financial promises it makes under all reasonable circumstances.”
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