In week of bad news for the major banks, some relief has been offered by Moody's Investors Service.The ratings agency said that a discussion paper circulated by the Australian Prudential Regulation Authority earlier this week, in which it proposed two options to improve the transparency, comparability and flexibility of Australia's bank capital framework would be credit positive as either approach would make it easier to assess the major banks' capitalisation, relative to their global peers."APRA's proposals are not intended to change the quantum of bank capital, but to improve the comparability of reported capital ratios," said Tanya Tang, a Moody's analyst.This has long been a point of contention between the banks and the prudential regulator, and is said to cause confusion among potential offshore investors."Australian banks' reported capital ratios are generally lower than banks with comparable capital strength in other jurisdictions because of the regulator's conservative implementation of Basel capital requirements," Tang said. "Our view is that an alignment with global peers would improve investors' understanding of the true strength of Australian banks' capitalisation and support the banks' access to international capital markets where, in aggregate, they raise about two-thirds of their long-term debt," she said.APRA's first option would not change how Australian banks' capital ratios are calculated. Instead, banks would use a regulator-endorsed methodology to report an additional "internationally comparable" ratio to facilitate comparison to global peers.Its second option would remove aspects of conservatism in the definition of capital and banks' calculation of risk-weighted assets, making the calculation of capital ratios more consistent with global peers.Australian bank capital ratios would likely rise under the second approach, so APRA would also lift minimum regulatory capital ratio requirements to ensure that banks retain the same level of capital, Moody's suggested.The rating agency estimated that, using the Australia's four major banks' own calculations of internationally comparable Common Equity Tier 1 capital ratios as a starting point puts them, on average, 520 basis points higher than their headline regulatory CET1 ratio, with conservative RWA calculations being the main reason for the difference.