2 December 2021 - Finalising loss-absorbing capacity requirements for domestic systemically important banks

APRA is finalising requirements for the four major banks to maintain additional loss-absorbing capacity (LAC). The purpose of the adjustment is to ensure that, in the unlikely event of a failure, a major bank could be recapitalised using a large pool of private, rather than taxpayer, funds.

APRA wrote to the major banks confirming that the final setting for loss-absorbing capacity will be an increase in minimum Total Capital requirements of 4.5 percentage points of risk-weighted assets, to be met from 1 January 2026. The major banks have already made significant progress towards meeting this requirement, having met interim targets put in place following the consultation in 2018.