Prudential Standard APS 112 Capital Adequacy: Standardised Approach to Credit Risk¶


Regulator	APRA
Jurisdiction	AU
Status	live
Applicability	Platform

APRA Prudential Standard APS 112 Capital Adequacy: Standardised Approach to Credit Risk is the primary standard governing how ADIs using the standardised approach calculate risk-weighted assets (RWA) for credit risk. It prescribes risk weights by asset class — residential mortgage, corporate, SME, sovereign, bank, retail — and sets loss-given-default (LGD) floors where internal model comparisons are required. It is the Australian implementation of the Basel III standardised credit risk framework.

APS 112 operates as a complement to APS 110, providing the computational basis for the credit risk component of RWA. All ADIs must use the standardised approach unless approved for Internal Ratings Based (IRB) by APRA; a challenger bank will use standardised approach in all early operating years.

Compliance register¶

This register maps every material obligation under APS 112 to the platform control or institutional process that satisfies it. It is the static traceability layer for the Totara compliance report — dynamic data (module build status, test evidence, control test dates) is overlaid at runtime.

Scope legend¶

Symbol	Meaning
🤖 Automated	Platform enforces or performs the obligation. Primary control mode is GATE, AUTO, CALC, or ALERT. Human action is not required in the normal case.
📊 Evidenced	Platform captures the evidence trail automatically. Human compliance decision sits on top. Primary control mode is LOG.
🏛 Institutional	Obligation is met by a process entirely outside the platform — credit policy, treasury, finance. Platform may generate evidence inputs but does not own the process.
N/A	Obligation does not apply to this deployment configuration.

Build legend¶

Symbol	Meaning
✅	Module built and deployed
🔨	Module planned — not yet built (`build_status: Not started`)
❌	Uncontrolled gap — no module attributed

Part 2 — Credit risk-weighted assets: standardised approach¶

Ref	Obligation	Scope	Policy	Platform controls	Build
Para 12–16	Residential mortgage exposures — apply prescribed risk weights based on LVR band and loan purpose (owner-occupied vs investor, P&I vs IO)	🤖 Automated	CLQ-001	MOD-033 (CALC) — risk weights applied by asset class from Basel/APRA configuration; residential mortgage risk weight determined by LVR band from MOD-115 output	🔨
Para 20–24	Corporate exposures — apply prescribed risk weights (75% for non-rated; lower for rated counterparties)	🤖 Automated	CLQ-001	MOD-033 (CALC) — corporate risk weight applied using external credit assessment institution (ECAI) rating where available; unrated at 75% by default	🔨
Para 25	SME exposures — eligible SME retail exposures may use 75% risk weight under retail portfolio treatment	🤖 Automated	CLQ-001	MOD-033 (CALC) — SME classification applied at origination; retail portfolio eligibility checked against maximum aggregate exposure threshold	🔨
Para 28–29	Sovereign and central bank exposures — prescribed risk weights by ECAI rating and OECD risk classification	🤖 Automated	CLQ-001	MOD-033 (CALC) — sovereign risk weight determined from configuration updated with current ECAI/OECD ratings	🔨
Para 30	Bank exposures — prescribed risk weights based on counterparty bank's ECAI rating	🤖 Automated	CLQ-001	MOD-033 (CALC) — bank counterparty risk weight sourced from configuration; inter-bank credit exposures classified accordingly	🔨
Para 35	Credit risk mitigation — eligible collateral (financial collateral, guarantees, credit derivatives) reduces RWA where conditions met	🤖 Automated	CLQ-001	MOD-033 (CALC) — collateral haircuts applied to eligible instruments where registered in the collateral system; no manual override of haircut values	🔨
Para 50	Off-balance sheet exposures — credit conversion factors (CCFs) applied to undrawn commitments and contingent liabilities	🤖 Automated	CLQ-001	MOD-033 (CALC) — CCFs applied to undrawn credit facilities and off-balance sheet items from product configuration	🔨

LVR monitoring (supporting APS 112 residential mortgage risk weights)¶

Obligation	Scope	Policy	Platform controls	Build
Current LVR calculated and maintained for each residential mortgage to determine applicable risk weight	🤖 Automated	CRE-001	MOD-115 (CALC) — LVR calculated daily; provides the LVR band input to MOD-033's risk weight determination for residential mortgage exposures	🔨

Institutional obligations (not platform scope)¶

Obligation	Owner	Platform evidence input
Selection and approval of external credit assessment institutions (ECAIs) for use in risk weight calculation	CFO / CRO	MOD-033 accepts ECAI ratings as configuration inputs; ECAI approval is a Board/management decision
Board approval of credit risk management framework (as required by APS 220)	Board / Head of Credit Risk	MOD-150 provides the risk dashboard; framework approval is a board governance act
APRA approval to use IRB approach (if sought in future)	Board / CRO / APRA	Not applicable to standardised-approach ADI; model submission is an institutional process

Coverage summary¶

Area	Total obligations	Platform automated 🤖	Platform evidenced 📊	Institutional 🏛
Risk weight calculations	7	7	0	0
LVR-based risk weight support	1	1	0	0
Total	8	8 (100%)	0 (0%)	0 (0%)

All attributed modules are currently build_status: Not started. The compliance position will update as modules are built and deployed.

Policy	Title
CLQ-001	Capital Adequacy Policy
CRE-001	Credit Risk Management Policy
REP-002	Prudential Reporting Policy

Official documentation¶

Policies referencing this standard¶

CLQ-001 — Capital Adequacy Policy

Compiled 2026-05-22 from source/entities/regulations/au-aps-112.yaml