Capital contortion burns through Macquarie surplus

It's only a couple of years since Macquarie reckoned its "surplus" capital to be in excess of A$3 billion, a number that once sparked ideas of a return of a material capital to help cover up the lack of profits at the investment bank and fund manager.

Only $300 million or so made its way back to shareholders under the guise of a return of capital last year.

Yet Macquarie on Friday produced a newer, much lower, estimate of this surplus of $1.4 billion - less than half the prior level.

Only a sliver of the reduction, around $300 million, is due to business growth and the risk in risk weighted assets, Macquarie outlined in its financial disclosures.

Most of the rest of the fall in this surplus is the application of APRA's Basel III standards, a shift away from a "harmonised Basel III" estimate.

 Macquarie worked its out its requirements "at the internal minimum tier one ratio of the bank group, which is seven per cent," it said. The Basel III minimum tier one ratio is 8.5 per cent.