The wrangle over how to measure bank capital and establish whether that level is sufficient for Australia's banking industry may linger unresolved for a long time."Computing a precise 'internationally harmonised' capital ratio is not practically possible," the Australian Prudential Regulation Authority wrote in its second submission to the Financial System Inquiry.This will frustrate the larger banks and their industry lobby, which have mobilised over the six weeks since the FSI's interim report to belittle the central, tangible policy idea of David Murray's panel, which is to impose yet one more layer of capital on the sector."A recent study commissioned by the Australian Bankers Association, which attempts to provide truly comparable capital ratios, only serves to emphasise this point," APRA said.PricewaterhouseCoopers undertook that study for the ABA, with the PwC work featuring in the second round submissions of a number of large banks.PwC, in its report to the bank, concluded: "Based on the data provided to us by the Australian banks, our best judgment is that, on average, the four Australian banks are at or above the 75th percentile of bank capital relative to the most appropriate comparator set of global banks."Some Australian major banks are unambiguously in the top quartile in terms of capital, others are closer to the 75th percentile but are still well above the median. "Our overall summary calculation gives a weighted average common equity tier one ratio in the range of 11.5 per cent to 12.5 per cent."PwC said that "as best as we can judge this is at or above the 75th percentile" but noted "the estimates of risk weighted assets have a judgemental component and this explains our conclusion that a range is appropriate."PwC put the average common equity tier one ratio for the big four at 8.76 per cent on APRA's methodology. It put the "internationally comparable CET1 ratio" on average for the four at 12.69 per cent.On the other hand, the "self-reported internationally harmonised CET1 ratio" for the four banks averaged 11.06 per cent.