Interpac Business and Migration Solutions Melbourne Australia

（September 6. 2011)

The nation's banks have criticised a decision by the prudential regulator to accelerate the timetable for the introduction of tough new rules on capital.

Australian banks will need to meet a common equity Tier 1 ratio of at least 4.5 per cent by January 1, 2013, two years earlier than required by the global standards, the Australian Prudential Regulation Authority said in a discussion paper released today.

Their total capital ratio must reach 8 per cent by the same date, according to the paper, which outlined proposals for its implementation of Basel III reforms.

But the Australian Bankers' Association questioned why the prudential regulator is bringing forward transition times for the new capital regime in its discussion paper on Basel III.

“There are a number of departures in the paper from the Basel standards released in December 2010, in relation to matters such as transition times and phase-in arrangements,” said ABA chief executive Steven Munchenberg.

“We think that banks should be given the maximum time to transition to the new regime and we will be putting this view forward to APRA.”

APRA today said that Australian banks and authorised deposit institutions (ADI's) will be well placed to meet the new minimum capital requirements.

However “this is not a reason to bring forward the new requirements,” Mr Munchenberg said.

“The ABA's member banks will consider the impact of the capital targets, phase-in arrangements and transition times, as well as individual prudential capital ratios, in order to determine the financial impact of the proposed new standards for Australia,” he said.

Comments from the industry are due on the APRA consultation paper in early December. Further consultation is expected after submissions on the paper have been lodged.

The next stage in APRA's regulatory development process is expected to be the release of draft standards in the new year.

APRA Chairman John Laker said the reforms will provide “positive benefits for depositors, other stakeholders and the stability of the banking system as a whole”.

“APRA's proposals seek to achieve a prudent balance between the industry's wish for greater international consistency of capital measures and the fundamental need to ensure that capital held by ADIs in Australia is genuinely available to absorb losses,” Dr Laker said.