Financial Regulatory Forum

Australian banks would benefit from more capital – central banker

By Reuters Staff
March 1, 2010

MELBOURNE, March 1 (Reuters) – Australian banks could do with a little more capital parked on their balance sheets even though they have weathered the global financial crisis in good shape, the country’s central bank chief said on Monday.

Reserve Bank of Australia Governor Glenn Stevens, appearing at a business conference, was responding to a question about controversial new bank-liquidity rules that have met with a cold reception from the country’s major lenders.

“It probably wouldn’t hurt for there to be a little more capital and more attention to liquidity,” Stevens said.

Australia’s prudential banking regulator has proposed new liquidity rules that would require local banks to park more of their money in high-quality assets such as government bonds, causing some banks to grumble that funding costs could rise.

Critics of the new rules point out that Australian banks came through the global financial crisis in good shape, albeit with the help of government guarantees on their wholesale funding.

The regulator, the Australian Prudential Regulation Authority, is expected to finalise and release its guidelines on the proposed new liquidity rules next year at the earliest, once a new code on international banking regulation is in place.

(Reporting by Victoria Thieberger, editing by Cecile Lefort and Mark Bendeich) ((mark.bendeich@thomsonreuters.com; +612 93731817; mark.bendeich.reuters.com@reuters.net))

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