"Offshore funding" for Aussie banks is looking tenuous again. (That's our word, not APRA's.)With banking crises and a recession now looking more probable than not in Australia it's time for a reset. Ten basis points. Go on, hike margins, APRA lit the green one bright.The liquidity threat in Australian banking, never far from critical, may be deadly. The tactful version yesterday on funding from Wayne Byres, APRA's chairman, read: "Recognising the risks associated with offshore funding, APRA said it identified the need to ensure that Australia's financial system continues to provide its core economic functions even in times of stress, and the benefits that flow from reducing the perception of an implicit government guarantee and the associated economic inefficiency this creates."APRA styled the totem of the project, the 2014 Financial System Inquiry, as having "endorsed the benefits of a strongly capitalised banking system. "Although acknowledging that the Australian banking system was generally well-capitalised already, the FSI recommended that APRA set capital standards such that capital ratios of authorised deposit-taking institutions (ADIs) are 'unquestionably strong'. The Australian Government endorsed this recommendation."With this in mind, a mix of tinkering and received thinking from the prudential cop was delivered into the capital market on Wednesday.S&P Global Ratings drew no fresh succour from APRA's Information Paper on 'unquestionably strong' capital benchmarks for Australia's banking sector.S&P summed up the paper, which lit up bank shares on the day, by saying it "suggests that by January 2020 the four major Australian banks would need to raise their regulatory Common Equity Tier-1 (CET-1) ratios by about 100 basis points compared with those disclosed in late 2016."S&P ruled out any U-turns on more than a score of credit downgrades for banks and others in May. "APRA's announcement has no immediate impact on any of our bank ratings in Australia."It listed hot topics of interest: "the level of buffers that the banks intend to maintain above the increased regulatory capital requirements, the path they intend to target to achieve increased capital, and the timeframe for doing so. "We will also assess the impact of pressure on the banks' returns on capital that will be posed by increased capital bases. We expect that the banks will further enhance their focus on cost controls - and may look at alternative earning sources - noting that the revenue growth would remain challenged by macroprudential limits on some parts of mortgage lending and relatively subdued demand for bank borrowing by the corporate sector.Turning to cost levers, S&P listed "the impact of pressure on the banks' returns on capital that will be posed by increased capital bases. We expect that the banks will further enhance their focus on cost controls--and may look at alternative earning sources."It comes with a qualifier: "[bank] revenue growth [may] remain challenged by macroprudential limits on some parts of mortgage lending and relatively subdued demand for bank borrowing by the corporate sector."S&P's take is one of several reliable ready comments from the credit ratings agenciesMoody's said the increased capital requirement added