Australian Banks Warn Against Tougher Regulations

Australia's Big Four Argue Against Imposing Tougher Capital Buffers

Aug. 29, 2014


MELBOURNE, Australia--Australia's largest lenders defended their ability to withstand any future banking crisis and warned against further moves to strengthen the financial system, in submissions published Friday to a government-backed review.

 The country's so-called Big Four banks in submissions to the review of the financial system opposed the imposition of tougher capital buffers. They have also argued against the need to ring-fence investment banking operations and advised caution over introducing any creditor "bail-in" system.


"A compelling case has not been made that further strengthening would provide additional benefits to the financial system," Mike Smith, chief executive of ANZ, said in a submission published on the inquiry's website Friday, adding steps had already be taken by the banks and regulators that would protect the public from losses.

The big banks and perceptions of "too big to fail" have been targeted by the continuing inquiry, which in an interim report in mid-July, discussed higher capital levels among ways of bolstering the financial system's ability to absorb losses. ..................

The Australian Prudential Regulation Authority ("APRA") in its own submission said that while it would welcome strengthening its resolution powers, it was wary of "bail-in" powers similar to those introduced in other countries that give authorities the power to write down or convert into equity unsecured creditor claims to prevent losses falling on the public. The Reserve Bank of Australia also warned that such bail-ins can deepen a lender's financial distress and spur contagion to the broader financial system.

Imposing losses on creditors could also affect bank credit ratings, which ANZ said would increase the cost of funding for the system by as much as A$1 billion a year and likely restrict the availability of funding.

The prudential authority and the banks also said they also saw little need to ring-fence banking operations in Australia, a notion discussed in the inquiry's interim report. They said the big banks have a traditional business model, dominated by retail and corporate lending with little exposure to higher risk investment banking.


What lies they all tell..............................little risk?  Ponzi Structures and imprudent lending policies targeting ARIPs.  These banks need every regulation we can dream up to be imposed upon them immediately and for all imprudent loans to be cleaned up...the mess you left behind Mike!   Its BFCSA Members with bucket and mops right now This email address is being protected from spambots. You need JavaScript enabled to view it.