The headline regulatory ratios for the four major Australian banks are lower than for other countries (Figures 8 and 9). However, differences in regulatory rules relating to the calculation of required capital suggest that different jurisdictions’ capital ratios should be interpreted with caution. In particular, the risk weighted assets numbers are not directly comparable across countries. APRA’s requirements for computing risk-weighted assets likely imply that risk- weighted assets in Australia are higher than for comparable banks in other countries, resulting in lower headline capital ratios for the same amount of capital. Moreover, due to APRA’s conservative capital eligibility and deduction rules.
