ABA hits out at minimum capital floor proposals

Australian banks say minimum floor will reduce risk sensitivity of the Basel framework


The Australian Bankers' Association (ABA) has slammed plans to impose a minimum capital floor, which would force banks to hold a certain amount of capital even if their internal model calculations suggest that they could safely hold less.

The approach suggested by the Basel Committee for Banking Supervision could potentially reduce the benefits from using an internal model, since calibration of the capital floor would be based on the standardised approach.

Responding to a consultation on the

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