Australian financial conglomerate Macquarie Group reported an A $ 2.2 billion ($ 1.57 billion) impact on its excess capital due to increased regulatory capital buffers, as noted in the latest reforms of the country’s banking regulator.
The Australian Prudential Regulatory Authority (APRA) on Monday released its new bank capital framework that requires banks to ensure that high levels of capital adequacy are maintained.
“The framework, developed over four years of consultation, will help ensure that Australian banks continue to have the financial strength to withstand future adverse economic conditions, ensuring depositors are protected and loans are supported.” APRA said in a statement.
APRA consults with industry
Macquarie added on Tuesday that APRA will consult with the industry ahead of the implementation date of January 1, 2023, and therefore the final impact on Macquarie’s capital situation will depend on the outcome of APRA’s consultation process and Macquarie’s commercial and geographic makeup.
APRA’s revision of the capital framework includes a minimum Tier 1 capital ratio of 10.25% and increased risk sensitivity for residential mortgages and commercial real estate loans.
“Macquarie Group’s excess capital has included provision for these regulatory changes for some time and Macquarie still expects it to have sufficient capital to meet these additional regulatory capital requirements,” said the company said in a statement.
ABC to disclose impact later
Australia’s largest bank, Commonwealth Bank of Australia, said on Tuesday it would provide an update on the final impact of the new capital framework when presenting its annual results.
“Although Australia’s banking sector is already heavily capitalized by international standards, the new capital framework will help ensure that it remains so,” said Wayne Byres, Chairman of APRA, while adding that the new framework of capital will ensure that Australia complies with the international Basel accord. Frame III, deadline 2023.
In a separate statement, Macquarie said it had raised A $ 1.3 billion by issuing approximately 6.8 million shares at a price of A $ 191.28 per share.
Macquarie gets her supplies on Tuesday
The company added that the funds raised “will provide additional flexibility to invest in new opportunities … while maintaining an appropriate excess capital.”
Macquarie Group shares rose 2.1% to AUD 198.15 on Tuesday afternoon. The S & P / ASX 200 Financials Index rose 1% to 6,327.10 on Tuesday.
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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade a CFD.
You can still benefit if the market moves in your favor, or suffer a loss if it moves against you. However, with traditional trading, you enter into a contract to exchange legal ownership of individual stocks or commodities for cash, and you own it until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the total value of the CFD trade to open a position. But with traditional trading, you buy the assets for the full amount. In the UK there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs come with overnight costs to hold trades (unless you use 1 to 1 leverage), which makes them more suitable for short-term trading opportunities. Stocks and commodities are more normally bought and held longer. You could also pay a commission or brokerage fees when buying and selling assets directly and you would need a place to store them safely.
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