APRA capital reforms a potential boost to the economy

The ABA welcomes today’s consultation paper from APRA on proposed changes to bank credit risk capital settings, which have the potential to support more lending and lift productivity.

ABA CEO Simon Birmingham said the consultation was a welcome step towards a more efficient capital framework while still retaining the underlying strength and stability of Australia’s banking system.

“We welcome any move to make the capital framework more efficient and more closely aligned with the real risk of lending, without compromising the prudential strength that keeps our banking system unquestionably strong,” Mr Birmingham said.

“Capital settings that more accurately reflect risk gives banks greater capacity to lend with confidence to the priorities that drive economic growth, from new homes and critical infrastructure to the businesses that employ millions of Australians.

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

“Banks will work closely and constructively with APRA through the consultation to ensure any changes deliver real benefits for customers, businesses and the broader economy.

“Australia rightly maintains prudential settings that strive to keep our banking system unquestionably strong, but they must also enable banks to keep lending into our economy as strongly as possible.”

Regulation & Policy