Bank analysts at Macquarie have warned of 'diseconomies of scale' among Australia's major banks as a result of APRA's review of its capital rules for bank subsidiaries.APRA announced the details of its review of Prudential Standard APS 111 a week ago, in conjunction with proposals by the Reserve Bank of New Zealand to lift Tier 1 capital to 16 per cent, and possibly include an additional buffer of 1 per cent for the largest banks. These are subsidiaries of the four Australian majors.Contrary to the major banks' initial reactions - and indeed against APRA's assertion that "no material additional capital will be required at an aggregate industry level" - the bank sector buy-side analysts have estimated that the sector will need to find a further A$13 billion in capital as a 'top up'."Moreover, this proposal confirms that additional capital required by the RBNZ will need to be funded using additional equity contributions," Macquarie's analysts warned.This is a turnaround from the well-capitalised position the majors reported a year ago."APRA's proposal creates capital-related diseconomies of scale for overweight institutions operating in offshore markets," the analysts said in a note to clients yesterday."We expect that the more concentrated banks will look to divest or scale down their NZ operations to minimise the potential capital impost stemming from pending regulatory changes."In this scenario, ANZ looks to be the hardest hit, while CBA will emerge unscathed, thanks to the divestment of its NZ life business.Throughout this year, analysts at Macquarie's wealth management business have maintained that APRA would look to maintain the Australian Level I capital base across the system and require banks to fund a higher RBNZ capital impost with new equity. "The consequences for ANZ and WBC [if APS 111 is modified as proposed] are worse than we expected, and CBA's capital impost now appears smaller than we estimated. As a result, we expect CBA to be in the position to return capital to shareholders, while others need to look to increase capital from current levels or look to optimise/divest portfolios," Macquarie's report stated."We estimate $4 billion to $5 billion capital shortfall across ANZ, NAB and WBC following APS 111 and pending implementation of RBNZ capital rules.""Given APRA's favourable capital treatment for the first 10 per cent of capital invested in NZ, this suggests that prospects of full NZ divestments are less likely, and banks would either look to divest portfolios, partially divest businesses or look for joint ventures."The impacts on each of the four majors - according to Macquarie's analysts - can be summarised as:•    ANZ is most impacted "given its sizable NZ business and more aggressive historic capital repatriation relative to peers," with its Level I capital position expected to be reduced by about 75 bps. "This means that ANZ will either need to look to offset its capital impact via a combination of divestments, portfolio rationalisation, and raising additional capital to fund future capital impost from the RBNZ," Macquarie said.•    CBA is the biggest beneficiary of this change. "We estimate