On Tuesday 10 September 2024, APRA announced its long awaited proposed changes on a more effective capital framework for a financial crisis. It is a gutsy document that tears up the playbook on bank regulatory capital funding. APRA wants to simplify the capital framework for banks. It wants to remove AT1 and replace it with mainly Tier 2 and some CET1.
In short, the AT1 hybrid market for Australian banks will cease to exist. For insurers, it looks like it will remain unchanged, for now. APRA does not expect to see banks increase AT1 from current levels or extend call dates beyond 2032.
