(25 May 2011 – Australia) The Australian Prudential Regulation Authority (APRA) released an enhanced capital framework for the banking industry on Monday.The measures include higher capital requirements to capture the credit risk of complex trading activities, increased disclosure for securitisations and off-balance sheet exposures, and higher risk weighting for some complex banking products.
APRA said in a statement that the enhancements would have only a limited impact on local banks, which largely avoided the higher-risk activities that resulted in huge losses for their overseas counterparts.
The measures by the Australian Prudential Regulation Authority are an update of the Basel II accord, which was first introduced in January 2008.
The much more significant reforms, targeting capital and liquidity buffers to make banks less vulnerable to external shocks, will be in the Basel III package, most of which will not be implemented until the second half of this decade.