Investment Analysis

Questions - Tutorial 1 (Week 3)

1. What is the function of the following pieces of legislation regulating the financial bodies?

The Australian Prudential Regulation Authority Act 1998 (Cth)

READ s2,8-11, 16-17,20-21,25,48A-D of the APRA Act FOR EXAM PURPOSES.

The Banking Act 1959 (Cth)

The Financial Sector (Shareholdings) Act 1998 (Cth)

2.

Anna is the Deputy Chair of APRA. She has been in this role since 1 July 2003. What is the result if:

a) Anna is investigating Bendigo Bank as part of her role at APRA and she acquired shares in Bendigo Bank on 15 April 2002?

b) Anna becomes a de-facto director of Bendigo Bank. She is not formally appointed as a director but she is the primary decision maker at all Bendigo Bank Board of Directors meetings and all other directors always follow her instructions.

3. What is an authorised deposit taking institution? What is the meaning of banking business?

4. What are the major forms of control the government has over the running of banks and other financial institutions?

5. Describe the role of APRA.

6. Describe the role of the RBA.

7.

READ PART I AND PART II (Div 1-2) of the Banking Act to answer this question and for exam purposes.

Dodgy Bros Finance Co (DBF) is in serious financial trouble. It is experiencing a severe liquidity crisis, and creditors are knocking on the door demanding payment for the goods and services provided to DBF.

a) You are a legal consultant to APRA. Advise APRA on what it can do in this situation, in terms of its powers etc.

b) What are the powers of APRA if DBF is eventually insolvent?

c) In the event of insolvency, do the depositors of DBF have any recourse against APRA if they only receive 2 cents in the dollar on their deposits from