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Basel risk weighting move creates waves 

December 30, 2014
Michael Bennet, The Australian

MOMENTUM is building for a major overhaul of the “risk weighting” rules governing the nation’s $1.3 trillion mortgage market, with the powerful Basel Committee proposing a raft of changes that could dent Australia’s big four banks’ competitive advantages.

Throwing fuel on the regulatory fire caused by the recent Murray inquiry, headed by former Commonwealth Bank chief David Murray, The Basel Committee on Banking Supervision — the global rule-making body — flagged dumping the requirement that banks be subject to minimum risk weights of 35 per cent for mortgages under the “standardised” modelling system.

The Switzerland-based committee, where new Australian Prudential Regulation Authority chairman Wayne Byres spent the past three years, is also considering a “capital floor” to protect banking systems from becoming overly leveraged and dangerously under-capitalised.

Read more: The Australian

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