Morrison’s new warning to banks

The Federal Treasurer, Scott Morrison has fired a thinly-veiled shot across the bows of the major banks about not seeking to pass through the cost of meeting higher capital adequacy requirements to consumers.

In a statement welcoming the Australian Prudential Regulation Authority’s (APRA’s) intended imposition of the higher capital adequacy charges, Morrison made clear he saw no reason for this to flow through to higher costs for banking customers.

“Today’s announcement should not significantly impact loan pricing or consumers’ ability to access finance,” he said. “APRA envisages that the unquestionably strong capital ratios can be met by 2020 and that the major banks should be able to meet the additional capital requirements from retained earnings, without significantly affecting business growth plans, dividends policies or undertaking equity capital raisings.”

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Morrison’s comments follow on from his pronouncements that the banks should not need to pass through the costs of the so-called ‘bank tax’ imposed as a result of the May Budget.

The Treasurer said Wednesday’s decision by APRA to increase the level of capital that banks are expected to hold to be considered ‘unquestionably strong’ delivered on the Government’s commitment in response to the Financial System Inquiry.

However he emphasised that APRA had acted independently of the Government on the issue.

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Umm, isn't the main reason for these changes to cool the housing market? He expects the banks to pass the cost on so this can only be a political point's scoring exercise.

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