Reserve Bank of Australia governor Glenn Stevens appears to have conceded that Australia's Big Four banks will need to hold more capital than their local competitors.
But Stevens agrees with those analysts who say the requirement will not be difficult for the banks to meet.
Stevens was responding to a question from Deloitte Access Economics partner Professor Ian Harper after his speech to the Committee for Economic Development of Australia (CEDA) on Tuesday night. The
transcript of his comments was released yesterday.
He said major Australian banks would be caught by the global regulatory definition of domestic systemically important institutions.
"That will say to hold a little bit more capital, not on the same magnitude as the JP Morgans and these other very, very large global banks, but a little bit more.
"I don't think it will actually be that hard for them to meet that by the time it comes in, which is some years away."
Global regulators have been pushing for country-level regulators to impose tougher capital requirements on large local banks that are significant to their domestic economies. The IMF's latest
Financial System Stability Assessment of Australia, released at the weekend, showed the Australian Prudential Regulatory Authority is under pressure to explicitly apply those requirements to the Big Four.
With Stevens' comments, APRA now appears almost certain to impose an additional explicit capital charge of perhaps one per cent of assets on the Big Four. That compares with the one to 2.5 per cent of assets required to be held by large global banks.
Stavenes' concession came just hours after the chairs of the ANZ and Westpac
attacked the proposal for higher capital requirements.
Most bank analysts appear to agree with Stevens that the requirement will have little effect on the Big Four.