Repurchasing their own mortgages showed “implicit support” by those banks for their securitisations, APRA said. It did not name the banks where these irregularities occurred.
The regulator requires banks “to be clearly separate from their securitisations and to permanently (except in limited pre-defined circumstances) transfer credit risk to the securitisation investors.”The regulator said it has asked those banks to disclose their repurchases in upcoming filings and conduct an independent review of their compliance with APRA rules.
Other issues were also identified, the regulator added without providing details, prompting the need for a wider review that will go into 2021. (Reporting by Nikhil Kurian Nainan in Bengaluru; Editing by Stephen Coates)