APRA lifts capital buffer for Big Four

Banking regulator orders Commonwealth, Westpac, ANZ Bank and NAB to lift capital buffers to 1% beginning 2016 to increase resilience.

Dow Jones Newswires

Australia's banking regulator has ordered the nation's largest lenders to boost the size of capital buffers designed to help them withstand potential economic shocks.

The big four banks will have to introduce a new one per cent capital buffer, the Australian Prudential Regulatory Authority said in a statement today.

The increase must be met by common equity Tier 1 capital and will come into effect at the start of 2016, the regulator said.

The new rules apply to Commonwealth Bank of Australia Ltd, Westpac Banking Corporation Ltd, ANZ Bank Ltd and National Australia Bank Ltd.

National Australia Bank was the first of the banks to react to the news.

It said in a market filing that it expected to meet the new requirements through organic capital generation in its owns business, and, if required, its dividend reinvestment plan.