Commonwealth Consolidated Acts

BANKING ACT 1959 - SECT 13A

Appointment of investigator or administrator, or investigation or control by APRA

             (1)  APRA may investigate the affairs of an ADI, appoint a person to investigate the affairs of an ADI, take control of the ADI's business or appoint an administrator to take control of the ADI's business if:

                     (a)  the ADI informs APRA that the ADI considers that it is likely to become unable to meet its obligations or that it is about to suspend payment; or

                     (b)  APRA considers that, in the absence of external support:

                              (i)  the ADI may become unable to meet its obligations; or

                             (ii)  the ADI may suspend payment; or

                            (iii)  it is likely that the ADI will be unable to carry on banking business in Australia consistently with the interests of its depositors and financial system stability in Australia; or

                     (c)  the ADI becomes unable to meet its obligations or suspends payment.

Note:          For information about another circumstance in which APRA may take control of the business of an ADI, see section 65.

          (1A)  The regulations may specify that a particular form of support for an ADI is not to be considered external support for the purposes of paragraph (1)(b).

             (2)  Throughout this Subdivision and Subdivision B, the term ADI statutory manager is used. It refers to the entity in control of an ADI's business under this Subdivision. That entity will be either APRA or an administrator of an ADI's business appointed by APRA.

Priorities for application of assets of ADI in Australia

             (3)  If an ADI becomes unable to meet its obligations or suspends payment, the assets of the ADI in Australia are to be available to meet the ADI's liabilities in the following order:

                     (a)  first, the ADI's liabilities (if any) to APRA because of the rights APRA has against the ADI because of section 16AI;

                     (b)  second, the ADI's debts (if any) to APRA under section 16AO;

                     (c)  third, the ADI's deposit liabilities in Australia (other than any such liabilities covered under paragraph (a));

                     (d)  fourth, the ADI's other liabilities (in the order of their priority apart from this subsection).

Note:          Subsection (3) applies whatever other consequences flow from the ADI becoming unable to meet its liabilities or suspending payment (such as investigation of the ADI's affairs, or control of its business, under this Division, or winding up of the ADI).

ADI's assets must at least equal its deposit liabilities

             (4)  An ADI is guilty of an offence if:

                     (a)  it does not hold assets (excluding goodwill) in Australia of a value that is equal to or greater than the total amount of its deposit liabilities in Australia; and

                     (b)  APRA has not authorised the ADI to hold assets of a lesser value.

Maximum penalty:    200 penalty units.

Note 1:       Chapter 2 of the Criminal Code sets out the general principles of criminal responsibility.

Note 2:       If a body corporate is convicted of an offence against this subsection, subsection 4B(3) of the Crimes Act 1914 allows a court to impose a fine of up to 5 times the penalty stated above.

             (5)  An offence against subsection (4) is an indictable offence.

             (6)  If the circumstances relating to the asset holdings of an ADI are such that give rise to the ADI committing an offence against subsection (4), the ADI is guilty of an offence against that subsection in respect of:

                     (a)  the first day on which the offence is committed; and

                     (b)  each subsequent day (if any) on which the circumstances that gave rise to the ADI committing the offence continue (including the day of conviction for any such offence or any later day).

Note:          This subsection is not intended to imply that section 4K of the Crimes Act 1914 does not apply to offences against this Act or the regulations.