Major banks to raise more capital, APRA says

Christopher Joye

Coolabah Capital

In The AFR today I review a significant new speech by APRA's impressive boss, Wayne Byres, who cautions that the major banks' capital ratios will have to rise "somewhat higher"---contrary to claims they are done and dusted. Interestingly, Byres also said APRA would work to enhance "competition" where it can, which should be good news for the majors' rivals. APRA has already announced it will help fast-track smaller banks towards the majors' much more advantageous risk-weight and capital levels, which have been a key driver of their superior returns on equity. Two major focuses for APRA in 2016 are capital and working out how Australia will customise its Total Loss-Absorbing Capacity (TLAC) regime (Byres reiterated on Friday that APRA will sensibly "hasten slowly" on TLAC). Here I examine a report by CreditSights, which argues that the major banks are having a fundamental "rethink" on their preferred TLAC approach. The majors appear to be converging towards "statutory" as opposed to "contractual" solutions that involve senior (or some derivation of senior) rather than subordinated bond bail-in. Read for free here (VIEW LINK)


3 topics

Christopher Joye
Portfolio Manager & Chief Investment Officer
Coolabah Capital

Chris co-founded Coolabah in 2011, which today runs over $8 billion with a team of 40 executives focussed on generating credit alpha from mispricings across fixed-income markets. In 2019, Chris was selected as one of FE fundinfo’s Top 10 “Alpha...

I would like to

Only to be used for sending genuine email enquiries to the Contributor. Livewire Markets Pty Ltd reserves its right to take any legal or other appropriate action in relation to misuse of this service.

Personal Information Collection Statement
Your personal information will be passed to the Contributor and/or its authorised service provider to assist the Contributor to contact you about your investment enquiry. They are required not to use your information for any other purpose. Our privacy policy explains how we store personal information and how you may access, correct or complain about the handling of personal information.

Comments

Sign In or Join Free to comment