Banks will have to apply a risk weight of 20 per cent to margin loans, at least when it comes to calculating capital for regulatory purposes next year.The Australian Prudential Regulation Authority said in a media release yesterday that, "as an interim measure it will apply a risk-weight of 20 per cent to outstanding loans that are backed by listed equity investments; otherwise, exposures are to be treated as secured loans."APRA said this treatment will apply under both the standardised and advanced approaches to credit risk.Banks have to apply a new mechanism to calculate capital ratios (for regulatory purposes, at least) from next year under a scheme known as Basel II. APRA is in the throes of finalising many details of the scheme as they will apply in Australia.APRA acknowledged in its media release yesterday that under the international framework for Basel II (devised by the Bank for International Settlements) both the standardised and advanced approaches to credit risk would typically result in a zero capital requirement for margin loans. Under the less discriminating method used under the current capital regime margin loans attract a 100 per cent risk-weight.  In Australia APRA's position has been clear for more than two years that it did not regard a zero risk weight as acceptable.APRA said it engaged an independent, and unnamed, consultant to review the level of capital that may need to be set aside for margin lending exposures.  APRA said the consultant recommended that a capital charge of three per cent (equivalent to a 37.5 per cent risk weight) be applied to margin lending exposures, with an acceptable range between one per cent (12.5 per cent risk-weight) and four per cent (50 per cent risk-weight).APRA, however, settled on a 20 per cent risk weight. The decision is favourable for lenders such as Adelaide Bank where margin lending is a fast growing segment of the business.