australian banks to hold extra capital to cover mortgages
Last Updated : GMT 17:58:00
Arab Today, arab today
Arab Today, arab today

Australian banks to hold extra capital to cover mortgages

Arab Today, arab today

Arab Today, arab today Australian banks to hold extra capital to cover mortgages

Australian Banks
Sydney - XINHUA

In a move to strengthen Australia's financial industry and bring it into the world's top quarter, Australia's major banks will be required to hold billions of AU dollars in extra capital to cover housing mortgages, Australia's financial regulator said on Monday.

The Australian Prudential Regulation Authority (APRA) said it will increase the average risk weighting for home loans in Australia from around 16 percent to at least 25 percent from July 1, 2016, requiring Australia's banks to lift their capital on average by 80 basis points.

Mortgage risk weights reflect the belief that residential mortgages are safer than other types of loan, therefore the banks need only to hold enough capital to cover losses on a certain percentage of their total residential mortgage loan book, rather than 100 percent of the loans, the Australian Broadcasting Corporation (ABC) reported on Monday.

The move would go some way towards Australia's banks meeting a key recommendation of the Australian government's Financial System Inquiry, aiming to rank among the top quartile of global banks in terms of reserved capital.

The move applies to Australia's big four banks - ANZ, the Commonwealth, National Australia Bank and Westpac - as well as Macquarie Group. Until the APRA move, they've been able to set their own risk weighting for mortgages.

Australia's smaller lenders - which have a risk weighting of 35 percent - have persistently argued the current risk rating status quo gives the major's a competitive advantage.

"The mortgage industry was a little bit biased towards the major players because they could hold less capital and, therefore, it brings the center of gravity back a little further towards some of the smaller players," the principal of Digital Finance Analytics, Martin North said.

ANZ told local media it would likely need to add an additional 2.3 billion Australian dollars (1.7 billion U.S. dollars) to its mortgage-lending book to meet the APRA requirement, saying its current risk weight for mortgages is around 15 percent.

Westpac has been the only major to be concrete the capital raising's likely impact, however the bank's Chief Financial Officer, Peter King, told the ABC shareholders and customers would bear some of the lender's 3 billion Australian dollar (2.2 billion U.S. dollar) cost.

"We are well placed for this change having already taken a number of significant steps to boost our capital position, including partially underwriting the first half 2015 DRP (dividend reinvestment plan) and the recent sale of shares in BT Investment Management," King said. "While Westpac is well-placed to meet these changes, increased capital does come at a cost. The cost of holding higher capital will inevitably be borne by customers and shareholders."

arabstoday
arabstoday

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

australian banks to hold extra capital to cover mortgages australian banks to hold extra capital to cover mortgages

 



Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

australian banks to hold extra capital to cover mortgages australian banks to hold extra capital to cover mortgages

 



Arab Today, arab today
Arab Today, arab today Jordanian woman reveals her project

GMT 00:46 2017 Saturday ,11 November

Jordanian woman reveals her project
Arab Today, arab today Prince's vision spurs new Cornwall village

GMT 03:12 2017 Saturday ,18 November

Prince's vision spurs new Cornwall village
Arab Today, arab today Keep kids busy at Thanksgiving gatherings

GMT 11:14 2017 Friday ,10 November

Keep kids busy at Thanksgiving gatherings
Arab Today, arab today Israel ready to cooperate with Saudi

GMT 06:31 2017 Friday ,17 November

Israel ready to cooperate with Saudi
Arab Today, arab today Presenter Sherine Ramahi proud of her career

GMT 06:46 2017 Sunday ,19 November

Presenter Sherine Ramahi proud of her career
Arab Today, arab today
Arab Today, arab today
Arab Today, arab today Australian academic's book pulled

GMT 15:20 2017 Monday ,13 November

Australian academic's book pulled
Arab Today, arab today May under Brexit pressure at EU reform summit

GMT 02:14 2017 Saturday ,18 November

May under Brexit pressure at EU reform summit
Arab Today, arab today Delhi half-marathon to go ahead

GMT 03:51 2017 Saturday ,18 November

Delhi half-marathon to go ahead
Arab Today, arab today The history of solar eclipses

GMT 05:16 2017 Sunday ,20 August

The history of solar eclipses
Arab Today, arab today Tesla unveils its all-electric semi truck

GMT 02:59 2017 Saturday ,18 November

Tesla unveils its all-electric semi truck
Arab Today, arab today Baidu speeds up AI progress

GMT 11:46 2017 Friday ,17 November

Baidu speeds up AI progress
Arab Today, arab today Hanan Metawe denies apology for “Major Treason”

GMT 12:22 2017 Thursday ,16 November

Hanan Metawe denies apology for “Major Treason”
Arab Today, arab today paObama climate envoy slams Trump's rejection

GMT 16:04 2017 Friday ,17 November

paObama climate envoy slams Trump's rejection

GMT 08:06 2017 Wednesday ,15 November

Ayten Amer happy for “The Flood” success

GMT 11:15 2017 Thursday ,16 November

Angola oil boss sacked by father's protege

GMT 18:41 2017 Friday ,20 October

Designer Aql Faqih aspires to innovation

GMT 11:38 2017 Wednesday ,15 November

Unloved vultures fight for their survival

GMT 11:49 2017 Thursday ,17 August

Egyptian artist presents new collection of designs

GMT 06:13 2017 Friday ,17 November

Pope denounces healthcare inequality

GMT 05:18 2017 Thursday ,16 November

Boeing announces $27bn from flydubai

GMT 17:12 2017 Monday ,07 August

Al-Shawaifi reveals secrets of total solar eclipse

GMT 16:53 2017 Tuesday ,05 September

Youssra depended on colored foam
Arab Today, arab today
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube
arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday