APRA’s Wayne Byers gave a speech on 5 April which sought to set the agenda for the future state of the bank capital in Australia. Whilst clearly the agenda is that bank capital is to increase, I found the speech misleading on the current state of major bank capital and therefore grossly misleads the market in how much extra capital is actually required to ensure that the major banks are unquestionably strong and therefore are most unlikely to call on taxpayer support.
The recommendation of David Murray’s Financial System Inquiry (FSI) and as accepted by the Federal Government was that unquestionably strong was when the major banks capital or CET1 Ratios are in the top 25% of international peers.
As reported on MB, Morgan Stanley doesn’t think it’s very much but has MS done enough homework?