ANZ annoyed some investors and encouraged others with the announcement of the decision to cut the dividend by 25 per cent, a step that will allow the bank to retain about $500 million in capital this year.Having implied back in November 2008 that ANZ would not cut the dividend but might freeze it, and seemingly taking into consideration the investment objective of many small investors, ANZ's board three months later has opted for a harder response.The bank is also considering selling hybrid securities, as Westpac has done this week.Westpac, NAB and Commonwealth have also all sold new shares, and in volume, over the last two or three months.John Laker, chair of the Australian Prudential Regulation Authority, said in a speech yesterday that steps by banks to review their dividends policy was a "sensible development. Dividend payout ratios adopted in good times should not be seen as sacrosanct and it is important that dividend policies be set at a sustainable level."Laker also went on to make clear the current trend toward minimum capital ratios for big banks of eight per cent of more was driven by bank board and management.The APRA head said this was "a response to market pressures, and not due to APRA's prudential requirements". Going on to make a wider point on the consequences of this trend, Laker said that capital ratios "driven too high in the current environment run the serious risk of inhibiting normal credit intermediation and setting in train a credit contraction."