(7 September 2011 – Australia) The Australian Prudential Regulation Authority (APRA) released a discussion paper on Tuesday that called for local banks to meet tighter regulatory capital ratios in full from January 2013.Originally transitional arrangements between 2013 and 2019 were proposed by the global regulator, the Swiss-based Basel Committee on Banking Supervision.
Australian Bankers’ Association (ABA) chief executive Steven Munchenberg said APRA’s argument seemed to be local banks were already compliant with the revised standards, so the timetable should be brought forward.
“While it’s not a huge problem for us and the changes are manageable, we still don’t think acceleration is necessary,” Mr Munchenberg said.
In addition to meeting the revised, 6 percent, minimum tier one capital ratio by 2013, local banks will also have to comply with a 2.5 percent capital conservation buffer in full from January 2016, ahead of a global phase-in period between 2016 and 2019.
APRA chairman John Laker said the regulator had been actively involved in developing the reforms and fully supported their implementation in Australia.
“By requiring (banks) to hold higher minimum levels of better quality capital, supplemented by minimum capital buffers, the reforms will enhance APRA’s current prudential capital framework, with positive benefits for depositors, other stakeholders and the stability of the banking system as a whole,” Mr Laker said.