Conflict abuzz in the banking industry
(30 November 2009 – Australia) The Australian Prudential Regulatory Authority (APRA) has hammered home its position on tougher liquidity requirements; amongst buzz from the banking sector that it may have a detrimental effect on the economy.
In recent weeks, banking heavyweights have all commented on the proposal for tougher liquidity requirements being considered by the regulator.
CBA chairman, John Schubert, warned that the moves to toughen the already ‘conservative’ liquidity requirements could hamper the country’s economic recovery and drive up costs for consumers.
John Laker, chairman, APRA, rebuffed the banks campaigning against global efforts to increase capital.
Dr Laker said that Australian lenders would be required to fall into line with what was emerging as a ‘consensus’ on global banking.
The regulation will require banks to set aside billions of dollars in largely unproductive assets, such as cash and government bonds, that would be liquid in private markets in times of stress.
The potentially billions of high quality assets to be set aside could effect banks’ bottom lines.
Dr Laker added that if the banks don't want to play by those standards, then they have got to give a very careful explanation to the market.
However, Dr Laker acknowledged that the sum of the planned reforms should not strangle the banking system.
Dr Laker added that some have said, the global reform initiatives will go too far given how well Australian financial institutions performed through the crisis, but any self-congratulatory tone here needs to be curbed; after all many hands were involved in the lifting.
CBA chairman, John Schubert, warned that the moves to toughen the already ‘conservative’ liquidity requirements could hamper the country’s economic recovery and drive up costs for consumers.
John Laker, chairman, APRA, rebuffed the banks campaigning against global efforts to increase capital.
Dr Laker said that Australian lenders would be required to fall into line with what was emerging as a ‘consensus’ on global banking.
The regulation will require banks to set aside billions of dollars in largely unproductive assets, such as cash and government bonds, that would be liquid in private markets in times of stress.
The potentially billions of high quality assets to be set aside could effect banks’ bottom lines.
Dr Laker added that if the banks don't want to play by those standards, then they have got to give a very careful explanation to the market.
However, Dr Laker acknowledged that the sum of the planned reforms should not strangle the banking system.
Dr Laker added that some have said, the global reform initiatives will go too far given how well Australian financial institutions performed through the crisis, but any self-congratulatory tone here needs to be curbed; after all many hands were involved in the lifting.
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