Claims on big bank capital dismissed

The Customer Owned Banking Association has dismissed suggestions by Australia's largest banks that their capital holdings are at their highest point.

"The claim doesn't stack up," said Mark Degotardi, COBA's acting CEO.

"The major banks have consistently argued through the Financial System Inquiry debate that they hold more capital now than ever before, but APRA's own statistics don't support this.

"Our analysis shows capital holdings by the major banks are actually lower now than they were before or during the GFC.

"The major banks' claim about higher capital holdings is based on the way they are allowed to risk-weight their assets. A simple calculation of capital as a percentage of total assets paints a very different picture," he said.

APRA's data shows that over the last decade the major banks - unlike all other ADIs - have been reducing the proportion of capital they hold, which led COBA to argue that that major bank capital has fallen from around seven per cent ten years ago to around five per cent today.

"We're confident the FSI will put constructive recommendations on these matters to the Federal Government and we look forward to the release of the FSI's final report next month," Degotardi said.