HomeView 2013 Media ReleasesMore capital flexibility for customer owned banking

Media Statement

COBA welcomes the release for public consultation of draft amendments to APRA’s prudential standards on capital to accommodate the customer-owned model.

The draft amendments will restore the ability of the customer owned banking sector to continue to raise alternative forms of capital to retained earnings - an ability that was lost when the Basel III capital standards came into effect on 1 January this year.

Commenting on APRA’s announcement, COBA Head of Public Affairs Mark Degotardi said:

“This is a welcome step towards recognising the customer-owned business model, and not just the listed model, in the prudential regulatory framework for banking.

“Customer-owned banking institutions - credit unions, building societies and mutual banks - provide critical competition and choice in Australia’s retail banking market. The regulatory framework must be tailored to reflect our model.

“Australia’s customer-owned banking sector’s is one of the strongest in the world – with 4.5 million customers and total assets of $85 billion. The sector here in Australia is also one of very few in the world that complies with the Basel global banking standards.

“The Basel III capital standards are designed for internationally-active listed banks and implementation of the standards in Australia in January 2013 actually reduced the range of capital options for customer-owned banking institutions.

“COBA has been in discussions with APRA for some time about giving customer-owned banking institutions the flexibility to raise capital within the Basel III rules and also within ASIC’s regulatory guide on mutuality.

“COBA members are strongly committed to retaining their highly successful, customer-focused model but they also need additional capacity to raise capital when needed to grow and take strategic opportunities.

“Our sector is very strongly capitalised and will always rely on retained earnings as its primary source of regulatory capital. This change simply provides additional flexibility for capital management.

“COBA will make a submission to ARPA on the detailed proposal and we look forward to APRA’s implementation of the amendments as soon as practicable.”

For more information please contact:
Daniel McDougall, Senior Adviser Media
02 8035 8444 or 0407 637 541, This e-mail address is being protected from spambots. You need JavaScript enabled to view it

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Media Contacts

Mick Gibb
Corporate Affairs Manager
P: +61 2 8035 8444
M: +61 423 149 494
Email Mickcontact-arrow

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