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Banks to lift capital adequacy ratios 

July 13, 2015

Mike Taylor, Money Management

Australia's major banks will need to increase their capital adequacy ratios by at least 200 basis points to meet a recommendation emanating from the Financial System Inquiry (FSI) that they be "unquestionably strong".

That is the assessment of the Australian Prudential Regulation Authority (APRA) following an international comparison study in which it compared Australia's big banks to a sample of 98 large and internationally-active banks that are included in the Basel Committee of Banking Supervision's most recent Basel III Quantitative Impact Study.

The APEA study concluded that while the major Australian banks were relatively well capitalised, they would need to increase their capital adequacy ratios by at least 200 basis points, relative to their position in June, last year, to be regarded as "unquestionably strong".

However the APRA report makes clear that, at this stage" no decision has been made on the total magnitude of any strengthening of capital requirements nor when that strengthening would need to be completed by".

Read more: Money Management

 
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