The Australian Prudential Regulation Authority (APRA) has released a letter to ADIs providing guidance on managing the risks associated with indemnities in divestment transactions. The guidance is intended to ensure a consistent and prudent approach is taken across the industry, as these indemnities can expose ADIs to potentially significant liabilities. The principles in the guidance on prudent management and oversight equally apply to all other APRA-regulated industries, where similar risks are faced.
The letter is available on the APRA website at: Indemnities in divestments.
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