APRA to continue Basel III implementation on time
(7 May 2013 – Australia) Planned reforms will not be delayed by Australia’s banking regulator, as overseas banks have been granted a delay by the global regulator.
To protect the world economy from financial shocks, global authorities will force banks to hold larger amounts of easy-to-sell assets such as top-rated government bonds.
However, in January, after global economic hardship, the Bank for International Settlements (BIS) delayed the starting of the reforms until 2019, and widened the pool of eligible assets to include higher-returning bonds and shares.
But the Australian Prudential Regulation Authority (APRA), which has the final say on how the rules will be implemented in this country, will not be adopting the softer approach signalled by the Basel Committee, as the global regulatory body is known.
On Monday APRA said the good health of Australian banks meant they were well placed to meet the new rules by 2015, as it had planned previously.
'These arrangements were introduced in light of the considerable stress facing banking systems in some regions. Australia, however, is not one of those regions,' APRA said in a discussion paper.
It noted the International Monetary Fund's concern that Australian banks were highly exposed to swings on global markets because of their reliance on wholesale funding markets.
'This is a conservative approach but one that is fully consistent with the capabilities and needs of the Australian banking system,' it said.
Under the liquidity rules, banks must hold enough easy-to-sell assets to cover their lending outflows for a month – what APRA calls a 'significantly severe liquidity stress scenario'.
Australian lenders are worried the earlier implementation may put them at a global disadvantage.
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