ANZ will continue to use a discount on reinvestment of its dividends to build its capital ratios as the bank waits for APRA to clarify the details of the Basel III regulatory regime in Australia. The bank raised A$1.2 million in new capital through the DRP over the last 12 months and has set the discount at 1.5 per cent for the current dividend of 64 cents a share. "Our basic approach is to continue to retain capital to drift this number up," Peter Marriott, the bank's chief financial officer, told the investor briefing yesterday. Mike Smith, chief executive of ANZ, told the briefing that, "I've been fairly consistent in my view that it's better to hold a little bit more capital than too little over the past couple of years, because of the uncertainty not only in the market but also the regulatory uncertainty. "I still don't really believe that we have regulatory certainty, and I feel that while Basel III has now imposed capital ratios which everybody's supposed to have agreed to, the definition of risk asset seems to be different in every country - so you'd say: 'well, where's the consistency?' "The US doesn't seem to be paying very much heed to Basel III. They seem to be doing their own thing anyway, and my conversations with the US recently have been to the effect that they [will] impose stricter requirements than Basel III has.   "Let's also remember, there will be a transition period. This will take several years, particularly for the European banks, because if you look at where they are in comparison, it's going to take them many, many years to actually raise that amount of money.   Marriott, responding to a question from Brian Johnson of CLSA Australia over the probable "core tier one" capital ratio for local banks, said: "We don't have clarity around the definition of how they're going to measure the components. "Bluntly, the seven per cent level would actually result in a level of capital for the Australian banks that is far too high. "But, until APRA comes out with some clarity around this, we don't know, and, in the meantime, our basic approach is to continue to retain capital to drift this number up, and then we'll have to respond as the picture becomes clearer. " Smith echoed these sentiments. "I feel that we're doing it the right way, and it's a steady as you go approach and I hope that APRA aren't going to be too macho here and hold out for something which is going to make us globally uncompetitive," he said.