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Australia sets additional capital requirements for big banks
December 22, 2013 / 10:26 PM / in 4 years

Australia sets additional capital requirements for big banks

SYDNEY, Dec 23 (Reuters) - Australia’s systemically important “Big Four” banks will be required to set aside an extra 1 percent of equity capital to protect against the kind of turmoil seen during the global financial crisis under new regulations announced on Monday.

Australia and New Zealand Banking Group Ltd, Commonwealth Bank of Australia, National Australia Bank Ltd and Westpac Banking Corp already hold significant capital buffers and are expected to have sufficient reserves set aside to meet the extra requirements by the January 2016 deadline, the Australian Prudential Regulatory Authority said.

“APRA therefore does not believe that phase-in arrangements for the HLA (higher loss absorbency) requirement, beyond the two-year lead time, are necessary.”

The additional requirements for systemically important domestic banks are part of a global framework for financial institutions being overseen by the Basel Committee on Banking Supervision aimed at preventing the kinds of failures and public bailout of banks that occurred in 2008.

Australia’s big four banks are among the world’s largest and most profitable, having avoided the worst of the subprime mortgage crisis, risky lending and an investment banking bubble in the past decade.

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