The treatment of hybrid securities under the new capital rules for banks is "is now the most important transitional issue that we're focused on", Mark Joiner, finance director at National Australia Bank, told an investor briefing yesterday. Joiner used the briefing to survey a range of issues facing NAB and all banks as the Australian Prudential Regulation Authority refines its views on the local version of the Basel III rules being developed globally. NAB has A$8.5 billion in hybrid capital that counts towards its $39 billion capital base, some of which may be affected by regulatory plans to narrow the definition of capital. Turning to the debate over liquidity, Joiner said that "the structural challenges for Australian banks in satisfying liquidity coverage ratio have been addressed with the introduction of the RBA-dedicated facility." He said that with the finer details of the facility yet to be determined, and given APRA has stated that banks will first need to meet liquidity targets using their own balance sheet, this "implied the RBA facility is more of a last resort". Joiner repeated an earlier estimate that NAB faced "a $45 billion funding backlog" in order to meet new funding targets later this year, but also said that covered bonds "could effectively allow us to deal with this issue quite cleanly."