The Australian Prudential Regulation Authority is working with the mutual sector to look at how mutuals can achieve capital growth in a slow growth environment.APRA chairman John Laker said the industry needed to "apply some thought" to how mutuals could raise capital other than through retained earnings. Speaking at Finsia's Financial Services Conference in Sydney yesterday, Laker said: "We like institutions to be able to raise capital as and when they need it."We are talking to them [mutuals] about forms of capital for loss absorbency. "Life in a slow growth environment is very different to life in a higher growth environment. You have to cut your cloth [accordingly]."Some mutuals are taking steps to raise capital. Seventeen mutual ADIs plan to sell A$58 million in capital through the Australian Mutual Investment Trust.Around $46 million will be used to repay outstanding securities issued under a similar offer in 2006. A group of 21 credit unions sold $100 million in tier-one and tier-two capital at the time. The Australian Mutual Investment Trust will use the funds raised to invest in the subordinated debt of the 17 credit unions.Laker also told the Finsia conference that APRA's current work with banks was on debt serviceability. Over the past couple of years, APRA has focused on changes to credit standards."Some tightening has been unwound since the financial crisis," he said. The regulator has had discussions with lenders about high loan-to-valuation ratios.