Beware the unintended banking effect

Just how much tier-one capital is enough for Australian banks? Second-guessing APRA's advice on that question risks triggering a complex matrix of consequences.

It isn’t surprising that the four major Australian banks are paranoid about any discussion about increasing the amount of capital they have to hold. There are a range of players out to “get” them.

This is not a new discussion. It has raged since the onset of the financial crisis and so far the major Australian banks, despite coming through that period relatively unscathed, have been on the losing side.

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