Fitch: Higher capital requirements will improve the resilience of Aus banks

The US ratings agency, Fitch ratings, published its latest review on the Australian bank on Wednesday, highlighting that the news capital requirements will strengthen the country’s banking system.

Key Points:

The 4 major Aussie banks should be able to meet APRA requirements comfortably

It is possible that major banks will issue fresh equity if they see benefit in raising extra capital ahead of schedule

Higher capital requirements will improve the resilience of Aussie banks and particularly the larger banks

APRA's announcement to have greater impact on banks utilizing internal ratings based model for determining risk-weighted assets

APRA raising minimum common equity Tier 1 ratio for Aussie banks will improve banking system's resilience

The Australian Prudential Regulation Authority (APRA) has outlined its new "capital adequacy" targets in an information paper, and will require a 150-basis-point (1.5-percentage-point) increase in the minimum safety reserves that must be held by the big four banks and Macquarie.