APRA rules out following the US Fed in easing bank capital levels
APRA introduces a new operational risk standard but says it still sees uncertainty in global markets and has no plans to follow the US Fed in letting banks lower capital
The Australian banking regulator has no plans to follow the US Federal Reserve in lightening prudential capital requirements on banks, pointing to ongoing uncertainty in the financial system and global economy.
In a media briefing for the release of a new prudential standard for operational risk, Australian Prudential Regulation Authority member Therese McCarthy Hockey said the regulator was alert to developments but “we are confident” Australia had strong financial resilience.
“That leverage ratio in the US they’re talking about, you can see some of the rationale they’ve put behind it, but the way it applies is different to Australia,” she said in response to questions from Capital Brief.
The US Fed changes came after a concerted lobbying campaign from major American banks which argued variously they were being hamstrung in competing with foreign rivals, the capital burden was impacting bank investment in secure assets, and it was no longer necessary after being introduced in the wake of the global financial crisis.
