It has been a good week for APRA and the Reserve Bank. Their announcements surrounding the expansion of macro-prudential policy tools and warnings around the outlook for property prices have had the initial desired effect of maximum media coverage. They would hope that lenders and potential property investors are getting the message. The head of APRA yesterday further weighed in on the debate and flagged the prospect of a strengthening in banks’ capital positions. The key development in Evidente’s view was My Byres’ drawing attention to the fact that the banks’ leverage ratio has not increased materially since the financial crisis. In this post, Evidente undertakes an international comparision of leverage ratios and finds that Australia’s majors lie well below many of their global peers. Whatever APRA’s final recommendations are, the path to stronger leverage ratios will inevitably involve additional equity as well as a contraction of assets.