November 23, 2012 / 4:51 AM / 5 years ago

UPDATE 1-Australia banks need small capital increase for Basel III - ANZ CEO

(Adds quotes, IMF comments)

MELBOURNE, Nov 23 (Reuters) - Australia’s major banks will need a small capital increase to honour their Basel III global banking obligations, but should then easily meet them, the chief executive of Australia and New Zealand Banking Group Ltd said on Friday.

The International Monetary Fund this week said the country’s “Big Four” banks - ANZ, National Australia Bank, Commonwealth Bank of Australia and Westpac -- should be required to raise more reserves because the industry was dominated by the four majors.

The IMF said the risk to the financial system was increased by the majors controlling 80 percent of local banking assets and 88 percent of home mortgages.

ANZ Chief Executive Michael Smith stressed that Australian banks were among the strongest in the world.

“There is no doubt that you will have further capital calls in terms of the large four banks,” Smith told a business lunch.

“I don’t think it will be a dramatic increase in the capital charge, it will be half a percent or something like that. It will be quite easy to generate that,” he added.

The full Basel III rules are due to come into force in 2016 and Smith said the local banks would have plenty of time to prepare for the increased capital requirements.

The Big Four banks posted a combined record profit of more than $25 billion in 2011/12.

The IMF said a higher capital requirement for Australian banks would be desirable to bolster the stability of the financial system and would seem “a natural next step”.

Australia’s Prudential Regulatory Authority plans to introduce the Basel III requirements locally slightly ahead of schedule.

Reporting by Victoria Thieberger; Editing by Kim Coghill and Eric Meijer

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below