Comments from the Australian Prudential Regulation Authority that the major banks should increase their capital ratios by two percentage points have apparently given NAB chief executive Andrew Thorburn 5.5 billion reasons to be self-congratulatory.
In a speech to a Trans-Tasman Business Circle lunch in Sydney yesterday, Thorburn took credit for raising A$5.5 billion in equity before the banking regulator told the industry it needed to boost capital ratios to become "unquestionably strong", and despite the fact that there is still no deadline or clarity on how capital strength will be defined,
the AFR reports.
APRA's ambiguity is likely to be deliberate, given a host of changes being proposed by the Basel Committee on Banking Supervision to the ways capital ratios are calculated globally, the AFR notes.
Nevertheless, NAB's common equity tier 1 ratio is now sitting at ten per cent, leapfrogging the CBA and setting a new target for its Big Four peers. Westpac has plans afoot to raise $2 billion through a partially underwritten dividend reinvestment plan to boost its capital ratio, while ANZ Banking Group said it was comfortable with a CET1 "in the high 8s".
The Commonwealth Bank of Australia is rumoured to be preparing to announce a capital raising at the same time as its full-year profit report on 12 August - and possibly via two or more separate transactions, according to the AFR report of Thorburn's lunchtime speech.