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The Australian Prudential Regulation Authority (APRA) is investigating whether the banks have enough capital to cope with sharp market downturns, reports the Australian Financial Review.
Investigations have been taking place since December 07, with officials from APRA, the Treasury and the RBA meeting yesterday to discuss the impact of higher wholesale funding costs on the banks.
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“[We need to make sure that] the deposit-taking institutions are managing their liquidity very carefully and that they have the capital to sustain the sorts of growth rates they have enjoyed over the last few years,” said APRA chairman John Laker.
Another APRA source indicated that they will want to see the banks demonstrate “a broader range of resilience to a broader range of adversity” in the future.
