Australian regulator sets banks' capital buffer at zero per cent

[SYDNEY] Australia's financial watchdog on Thursday set the rate of countercyclical capital buffer for banks at zero per cent.

Countercyclical capital is part of Basel III reforms to protect banks against another global financial crisis. The buffer rate, set by Basel III, could vary between 0 and 2.5 per cent of risk-weighted assets depending on market conditions, but the Australian Prudential Regulation Authority (APRA) opted for the lower end of the range. "Based on APRA's assessment of current levels of systemic risk, including credit growth, asset prices and lending standards, APRA did not see a case for imposing a countercyclical buffer for Australian exposures at this point in time," APRA Chairman Wayne Byres said.

The announcement will take effect from Jan. 1 2016, APRA said.

REUTERS