16 July 2012 6:58am

The securitisation industry has lost its campaign to persuade the Australian Prudential Regulation Authority to take a hands-off approach to the capital treatment of subordinated securitisation tranches on the balance sheets of approved deposit-taking institutions.

Last November, APRA issued a discussion paper proposing an amendment to its prudential standard for securitisation (APS 120) that would require an ADI to deduct from tier-one common equity any holdings of subordinated tranches of securitisations that were originated by another entity.

Industry submissions argued...