How much more capital do the banks need?

Via Morgan Stanley:

APRA’s latest comments confirm that the major banks’ capital rules will be announced in the middle of the year. Capital requirements for mortgages are likely to be lifted, but the increase won’t be “dramatic”.

A clear signal on direction; clarity on timing: In our view, comments from APRA Chairman Wayne Byres about “unquestionably strong” capital requirements have been very consistent over the past 2-3years. However, we think the statements in today’s speech are a clear signal that the banks will need more capital, and that mortgage risk weightings will be lifted again. An information paper will be issued around the middle of the year.

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About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.