ADIs will still have to clear dividend payments with the banking regulator if they exceed after-tax earnings, but they will not have to seek agreement to pay distributions on subordinated debt and preference shares. The Australian Prudential Regulation Authority wrote to banks and other regulated entities yesterday defending plans, which will come into force next year, that relate to "reductions in capital". APRA said that it "remains of the view that requiring prior approval for planned capital reductions arising from ordinary share dividends is a valuable supervisory tool."In relation to preference equity and subordinated debt, APRA said it "now considers that the costs associated with this requirement likely outweigh the supervisory benefits."