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Global bank regulation to ‘hit big four banks’ returns’ 

September 23, 2015

Michael Bennet, The Australian

The major banks’ returns are among the most “vulnerable” globally to regulatory efforts to make banks stronger by decreasing leverage in their mortgage books, a new report has found.

Foreshadowing more “repricing” of loans and deposits by the big four, Morgan Stanley said changes to mortgage risk weights could result in “material changes to expectations for banks’ capital returns/dividends and retail bank return on equity”.

Adding to the rampant debate in the wake of the financial system inquiry, the global report pointed out banks’ mortgage risk weights in Australia were among the lowest globally at about 10 per cent, versus an average 53 per cent in the US.

It comes amid concerns the big four may have to take the knife to their highly-valued dividends in coming years amid rising capital requirements and slowing growth.

Read more: The Australian

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