APRA: First-mover disadvantage on Basel III?

Author: | Published: 13 Sep 2011

The Australian bank regulator’s push for faster Basel III implementation could leave domestic banks less internationally competitive.

Australian Prudential Regulation Authority (APRA) last week proposed the Basel III timeline be accelerated by two years for authorised deposit-taking institutions (ADIs).

The move would see Australia’s banks required to meet a 4.5% minimum core capital requirement from 2013 and capital conservation standards - an additional layer of 2.5% common equity tier one capital below which capital conservation measures will apply - by January 2016.

Under the Basel III timeline, banks have until January 2015 to introduce the minimum capital requirement and Q4 2018 to meet the capital conservation buffer.

In a discussion paper released in conjunction with the announcement, the regulator said the Basel III timeline could be sped up because Australian ADIs were adequately capitalised to meet requirements. Moody’s has since ratified that judgment.

Nonetheless,...