Australia’s APRA Rejects Calls for Less Conservative Bank Rules

Australia’s banking regulator has rejected calls from the nation’s lenders to amend the way it plans to locally administer proposed global capital rules.

The Australian Prudential Regulation Authority “is not intending to change its broad approach to the implementation of the Basel III reforms,” the organization said in an emailed statement today in response to 13 submissions from lenders.

The Sydney-based regulator said a common theme in the submissions was concern that APRA’s proposals would give some banks a lower headline capital ratio than lenders in other countries. APRA, which supervises financial companies overseeing A$4 trillion ($4.2 trillion) in assets for almost 23 million Australian customers, also said it will proceed with a plan to accelerate some of its Basel implementation timetable.

“Some concerns were raised that APRA’s more conservative stance in some areas would disadvantage authorized deposit-taking institutions in international comparisons of capital ratios,” Chairman John Laker said in today’s statement. “However, APRA saw no strong in-principle arguments to move away from its traditional conservative stance, which is widely recognized and has served the Australian banking system well.”

APRA also said a common system of disclosure for capital ratios is being considered by the Basel Committee on Banking Supervision that will, “if adopted, facilitate international comparisons.”

Steven Munchenberg, chief executive officer of the Australian Bankers’ Association, said the nation’s banks are “well placed” to meet the new capital requirements.

“But we should make sure that progress to compliance with the Basel III standards is in line with our major trading and financial partners, and that the measurement of compliance facilitates comparisons with other banks globally.”

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