Australian banks’ exposure to non-banks via warehouse facilities is small at around one per cent of banks’ assets, the Reserve Bank said in its quarterly Bulletin yesterday. Banks impose lending standards for loans originated through their warehouse facilities, such as limits on LVRs, the RBA explained.  “Banks are incentivised to do this by APRA’s capital requirements; in 2018, APRA increased the required capital banks must hold against loans in warehouse facilities to be similar to that required if the bank directly held the loan. This helps to limit the scope for deterioration in lending standards and deviations from APRA’s prudential requirements.  “Further market discipline is imposed by virtue of rating agencies and investors closely scrutinising the quality of loans underlying a securitisation. “Longer term RMBS investors typically expect ‘prime’ loans to broadly conform to APRA standards.” Non-banks have lost half their collective market share since the GFC, the RBA analysis shows, with non-banks accounting for around five per cent of system assets.