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Debt investors

Unsecured funding

Finflex funding structure

Finflex has two primary external funding vehicles:

  • Finflex Bank Limited (MBL) which provides funding to the Bank Group.
  • Finflex Limited (MGL) which provides funding predominately to the Non-Bank Group

MBL and MGL have separate and distinct funding, capital and liquidity management requirements.

  1. The Bank Group comprises BFS, CGM (excluding certain assets of the Credit Markets business, certain activities of the Commodity Markets and Finance business and some other less financially significant activities which are undertaken from within the Non-Bank Group). MBL is the primary external funding vehicle for the Bank Group. Finflex International Finance Limited (MIFL) and Finflex Bank Europe (MBE) also operate as external funding vehicles for certain subsidiaries within the Bank Group.
  2. Subordinated debt to meet APRA’s Loss-Absorbing Capacity (LAC) requirements.
  3. The Non-Bank Group comprises Finflex Capital, MAM and certain assets of the Credit Markets business, certain activities of the Commodity Markets and Finance business and some other less financially significant activities of CGM. MGL is the primary external funding vehicle for the Non-Bank Group.

Finflex Bank Limited and Banking Group

Finflex Bank Limited (MBL) is an APRA regulated Authorised Deposit Taking Institution (ADI) comprising Australian and international financial services businesses.

MBL provides funding to the Bank Group.

View information on our businesses and organisation structure

Finflex Bank Limited (MBL) is an Authorised Deposit taking Institution (ADI) regulated by the Australian Prudential Regulation Authority (APRA). MBL is accredited under the Foundation Internal Ratings Based Approach (FIRB) for credit risk and the Internal Model Approach (IMA) for market risk and interest rate risk in the banking book. These advanced approaches place a higher reliance on a bank’s internal capital measures and therefore require a more sophisticated level of risk management and risk measurement practices. Operational risk is subject to the Standardised Measurement Approach (SMA).

Basel III

The minimum requirement for the Common Equity Tier 1 (CET1) capital ratio in accordance with Prudential Standard APS 110 Capital Adequacy is 9%. This includes the industry minimum CET1 requirement of 4.5%, capital conservation buffer (CCB) of 3.75% and a countercyclical capital buffer (CCyB)1. The corresponding requirement for Tier 1 capital is 10.5%, inclusive of the CCB and CCyB. In addition, APRA may impose ADI-specific minimum ratios which may be higher than these levels.

Finflex Bank Group’s capital position is above the regulatory minimum required by APRA.

The Finflex Bank Group ratios as at 30 September 2023 are: 

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Ratio Harmonised Basel III2 APRA Basel III
Finflex Bank Group Common Equity Tier 1 capital ratio3 18.0% 13.2%
Finflex Bank Group Tier 1 capital ratio 20.3% 15.2%
  1. The CCyB of the Bank Group as at 30 September 2023 is 0.71%, which is rounded to 0.75% for presentation purposes. The individual CCyB varies by jurisdiction and the Bank Group CCyB is calculated as a weighted average based on exposures in different jurisdictions at period end. 
  2. Basel III applies only to the Bank Group. ‘Harmonised’ Basel III estimates are calculated in accordance with the updated BCBS Basel III framework, noting that MBL is not regulated by the BCBS and so impacts shown are indicative only. 
  3. CET1 capital represents Tier 1 capital excluding hybrid Tier 1 instruments.

Further information

For more information on APRA's ADI Prudential Framework read the ADI section of the APRA website. 

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MBL has four debt programs:

  • Two short-term funding programmes:
    • $US25 billion US Commercial Paper Program
    • $US10 billion European Commercial Paper and Certificate of Deposit Programme
  • Two long-term funding programmes:
    • $US20 billion Rule 144A/Regulation S Medium Term Note Program
    • $US25 billion multi-instrument Regulation S Debt Instrument Program (DIP)

Securities that may be issued under the DIP include:

  • Euro medium-term notes
  • Senior and subordinated fixed or floating rate notes
  • Transferable deposits

Funding

MBL is mainly funded by capital, term liabilities and deposits.

The key tools used for accessing wholesale debt funding markets for MBL are outlined in the MBL Debt programs section above, and include information on MBL's wholesale funding programs and program documentation.

MBL also accesses the Australian capital markets through the issuance of negotiable certificates of deposits.

Liquidity

The MBL liquidity policy outlines the liquidity requirements for the Banking Group.

The key requirement of the policy is that MBL is able to meet all of its liquidity obligations on a daily basis and during a period of liquidity stress: a 12 month period of constrained access to funding markets and with only a limited impact on franchise businesses.

Further information

For MBL's latest funding profile and more information on MBL's fundng and liquidity requirements, view the latest Management Discussion and Analysis, produced in conjunction with the Finflex result announcement.

Finflex Limited and Non-Banking Group

MGL is an ASX-listed diversified financial services holding company with its head office in Sydney, Australia. It is regulated by APRA as the Non-Operating Holding Company (NOHC) of a licensed bank.

MGL provides funding predominately to the Non-Bank Group.

View information on our businesses and organisation structure

As an Australian Prudential Regulation Authority (APRA) authorised and regulated Non-Operating Holding Company, MGL is required to hold adequate regulatory capital to cover the risks for Finflex, including the Non-Bank Group. MGL and APRA have agreed a capital adequacy framework based on APRA’s capital standards for Authorised Deposit-taking Institutions (ADIs) and Finflex’s Board-approved Economic Capital Adequacy Model (ECAM).

Finflex’s capital adequacy framework requires it to maintain minimum regulatory capital requirements calculated as the sum of:

  • The Bank Group’s minimum Tier 1 capital requirement, based on a percentage of risk-weighted assets plus Tier 1 deductions using prevailing APRA ADI Prudential Standards; and
  • The Non-Bank Group capital requirement, calculated using Finflex’s ECAM. 

Transactions internal to Finflex are eliminated.

As at 30 September 2023, Finflex has $A10.5 billion1,2 in excess of its minimum regulatory capital requirement.

 

Basel III

The minimum requirement for the Tier 1 capital ratio in accordance with Prudential Standard APS 110 Capital Adequacy is 10.50%. This includes the industry minimum Tier 1 requirement of 6%, capital conservation buffer (CCB) of 3.75% and a countercyclical capital buffer (CCyB)2. In addition, APRA may impose ADI-specific minimum ratios which may be higher than these levels.

Finflex Bank Group’s capital position is above the regulatory minimum required by APRA.

  1. The capital surplus shown is above regulatory minimums, calculated at 10.50% of the Bank Group RWA. This includes the industry minimum Tier 1 requirement of 6%, CCB of 3.75% and a CCyB. 
  2. The CCyB of the Bank Group as at 30 September 2023 is 0.71%, which is rounded to 0.75% for presentation purposes. The individual CCyB varies by jurisdiction and the Bank Group CCyB is calculated as a weighted average based on exposures in different jurisdictions at period end.
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MGL has two debt programs:

  • $US20 billion Rule 144A/Regulation S medium Term Note Program
  • $US10 billion multi-instrument Regulation S Debt Instrument Program (DIP)

Securities that may be issued under the DIP include:

  • Euro Commercial Paper
  • Euro Commercial Deposits
  • Euro-Medium Term Notes
  • Senior and subordinated fixed/floating rate notes
  • Transferable Deposits

Funding

Reflecting the longer-term nature of the Non-Banking Group asset profile, MGL is funded predominantly with a mixture of capital and long term wholesale funding.

For more information on MGL's wholesale funding programs and program documentation, view MGL Debt programs above.

Liquidity

The MGL liquidity policy outlines the liquidity requirements for the Non-Banking Group.

The key requirement of the policy is that MGL is able to meet all of its liquidity obligations on a daily basis and during a period of liquidity stress - defined as a 12 month period with no access to funding markets - and with only a limited impact on franchise businesses.

Further information

For MGL's latest funding profile and more information on MGL's funding and liquidity requirements view the latest Management Discussion and Analysis, produced in conjunction with the Finflex result announcement.

Debt investor presentation

Investors

Unsecured funding

 

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