The chief executive of Commonwealth Bank has told Australian regulators not to get too tenacious about implementing tougher capital rules.
This comes ahead of the final release of the Financial Services Inquiry this month, which is expected to recommend that the banks hold more capital against money lent out as a buffer to insure against financial shocks and make our “too big to fail” banks safer.
Speaking Commonwealth Bank's Annual General Meeting, chief executive Ian Narev warned regulators not to rush into enforcing stricter capital rules.
"In that environment we believe it's very important not to get too prescriptive. It's important for us to continue to find the right balance between growth and safety.”
After a year of hefty profits for Australia’s big four banks, Narev isn’t the only bank head to argue against higher capital buffers.
chief Mike Smith argued that higher capital costs will come at a detriment to consumers and businesses who will have to pay more for home and business lending.
While Westpac chief Gail Kelly
has warned that the rules could damage economic growth in the form of weaker dividend growth.
On Monday, global banking watchdog, the Financial Stability Board proposed new rules for the world’s 30 most influential lenders to increase capital reserves to at least 16 to 20 percent of their risk-weighted assets. This move won’t affect Australian banks directly, but could influence the final recommendation of Murray’s Financial Services inquiry.