Aussie banks to be asked to hold more capital against their NZ units

Capital plan: People walking past a Westpac bank branch in Sydney. Westpac Banking Corp says the impact for the APRA proposal be a reduction of about 40 basis point on its level 1 CET1 capital ratio. — Reuters

SYDNEY: Australia’s banking regulator said it plans to ask lenders to meet higher capital levels domestically to offset their exposure to large overseas units – a move that comes in response to plans by New Zealand to hike capital ratios for the sector.

Australia’s Big Four banks own the largest lenders in New Zealand, where proposed new capital ratios would require the banks to raise NZ$20bil (US$12.6bil) over the next five years.