Industry seeks slow down on bank capital reforms

The bank regulator in Australia is moving too fast to raise capital requirements and introduce a local version of the Basel III standards Ralph Norris, former managing director of Commonwealth Bank, wrote in a column in the Financial Review.

Only one incumbent CEO - Mike Smith from ANZ - has spoken out in similar terms.

Smith is the new chair of the Australian Bankers Association and Norris is the immediate past chair of the ABA, so the industry may be finding its voice, in public, on its disagreements with the Australian Prudential Regulation Authority.

Norris refuted one argument advanced by APRA in favour of an accelerated shift to the new capital standards, which is that banks will benefit in international funding markets from the more stringent capital standards.

"It can also be argued that it puts them at a disadvantage if the increased regulation puts pressure on the interest cost for Australian businesses and consumers."

Norris asserted that banks were being asked to raise capital at a time when capital was "becoming increasingly scrace and more expensive. The cost of getting it wrong ... would have a direct impact on the price and availability of credit for Australian customers."

Norris called on APRA to "move with the main body on Basel III" and introduce new capital rules consistent with timelines being followed in Europe and North America.