Banks to engage closely on proposed APRA changes to liquidity and capital

The ABA acknowledges APRA’s proposed capital and liquidity changes. Australian banks share APRA’s commitment to maintaining a strong and resilient banking system.

ABA CEO Simon Birmingham said banks will work with APRA to ensure any enacted changes lead to real benefits for the economy and Australians.

“Banks will carefully review the liquidity proposals and will work with APRA to achieve a truly proportional liquidity framework that minimises unnecessary regulatory burden and cost,” Mr Birmingham said.

“We are encouraged by APRA’s commitment on capital to recalibrate risk weightings to give banks more flexibility to provide lending and support investment across the economy.

“Specifically, changes that can assist in the construction of new housing and infrastructure to help tackle Australia’s supply challenges are welcome.

“We are pleased to see progress on a broader class of eligible liquid assets including covered bonds, consistent with the findings of the Council of Financial Regulators Review into Small and Medium-Sized Banks.

“Banks also acknowledge APRA’s intent to proceed with a simplified version of the Fundamental Review of the Trading Book with reduced compliance costs. Banks will work with APRA to take this proposal forward.

“Australia’s banks are well capitalised and enter this period from a position of strength that has helped customers and the broader economy navigate recent global uncertainty.

“We hope the totality of these changes will enhance the ability of banks to contribute to Australia’s economic growth and needs.”