July 8, 2019 / 10:40 PM / 2 months ago

Australia decides on lower capital target for banks

SYDNEY, July 9 (Reuters) - Australia’s main banking regulator on Tuesday said it had decided to require banks to lift their capital by 3 percentage points by 2024, instead of the 4-5 percentage points originally planned.

Following a period of consultation with institutions, the Australian Prudential Regulation Authority (APRA) said banks would now be required to lift their total capital by 3 percentage points of risk weighted assets by Jan. 1, 2024. APRA said its original target of 4-5 percentage points was unchanged and it would spend the next four years considering “the most feasible alternative method of sourcing the remaining one to two percentage points.”

“Having taken into account feedback on market capacity, increasing Total Capital requirements by three percentage points by 2024 (instead of the four to five originally proposed) will be easier for the market to absorb and reduce the risk of unintended market consequences,” said APRA Deputy Chair John Lonsdale in a media release.

APRA said the new requirements would strengthen the loss-absorbing capacity of the major banks by a total A$50 billion ($34.87 billion), while resulting in a minor rise in funding costs of less than 5 basis points. ($1 = 1.4339 Australian dollars) (Reporting by Wayne Cole Editing by Chris Reese )

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