The Australian Prudential Regulatory Authority (APRA) yesterday afternoon released its new “more risk-sensitive” bank capital framework, which incentivises banks to lend to lower-risk owner occupiers rather than higher risk investors:
The framework, developed over four years of consultation, will help to ensure Australian banks continue to have the financial strength to withstand future adverse economic conditions, ensuring depositors are protected and lending is supported.
Alongside the new framework, which is summarised in an information paper released today, APRA has published updated prudential standards for capital adequacy and credit risk capital.
