Back in August, the Australian Prudential Regulatory Authority (APRA) issued a media release reaffirming that it would raise the banks’ average risk-weight on residential mortgages to 25%, as agreed following the Final Report of the Murray Financial System Inquiry (FSI).
Under the Basel Capital Adequacy Framework’s Advanced Internal Ratings-Based (IRB) approach, the major banks and Macquarie are permitted to use their own internal models to determine their risk-weighting and capital requirements.
