Subsidies to banks from the Australian government may exceed A$11 billion, analysis by John Watson of Margate Financial Research Solutions suggests.Morgij Analytics commissioned research on the topic from Watson, a former investment analyst.According to Watson, the introduction of the Financial Claims Scheme "is distorting the structure of household financial decision-making" over the relative competitive position of authorised deposit-taking institutions versus other financial market participants in the savings and investment markets. The RBA and APRA have agreed to allow participating Australian ADI's to partly fulfil the incoming Basel III Liquidity Coverage Ratio by paying the Reserve Bank of Australia (for a 15 basis point fee ). This will be priced "as a liquidity facility only with no margin for credit risk," Watson says. Watson contends that "as there is no liquid market for mortgage-backed securities where, a bank or the RBA can safely and quickly sell RMBS, the facility is really a credit facility and therefore should be priced as such."The major banks, which APRA now treats as "domestic systemically important banks," or D-SIBs, will "not pay for the benefits they derive from the market-perceived implicit government support", Watson says.D-SIBs also "get the benefit of credit ratings that have been explicitly lifted two notches higher than would otherwise be the case."Watson also argues that "because of the implied government guarantee, [large banks] are particularly aggressive on their internal ratings-based approach models for calculating risk weighted assets for residential mortgages."The implied guarantee does not just support the credit rating agencies opinions but also allows the market to ignore the low rate of actual capital held against residential mortgages. Risk weighted assets (RWA) for residential mortgages averages around 16 per cent for the D-SIBs. The implied government guarantee support allows the D-SIBs to improve their return on capital whilst maintaining profit levels." Watson asserts that APRA's December 2013 framework for D-SIBs, (which lifts the minimum capital ratio by one percentage point) "does not sufficiently level out the competitive landscape."