THE Australian Prudential Regulation Authority (APRA) has published guidelines relating to commercial property valuations to help banks during COVID-19.
The guidelines will assist banks comply with their prudential requirements during the COVID-19 environment which is creating challenges for in regard to updating commercial property valuations.
The regulator noted that many banks are offering small businesses and other borrowers the option to defer their repayments for a specified period and APRA has provided a regulatory capital approach for these loans.
This sets out that, over the next six months, banks do not need to treat the period of the repayment deferral as a period of arrears for capital purposes. This can be applied to a broad class of otherwise performing loans on which ADIs grant repayments deferrals. This includes loans that are less than 90 days past due and not impaired at the time deferral was granted.
For small business loans, the regulatory capital approach applies where banks offer a repayment deferral of up to six months. Small business loans are defined for this purpose as total loan facilities up to $10 million.
For other credit facilities the regulatory capital approach applies for an initial deferral period of three months, which may be extended for another three months if considered appropriate.
The full guide can be found by visiting https://www.apra.gov.au/banking-covid-19-frequently-asked-questions