Australia's four largest banks have been warned by Fitch Ratings that they need to improve their funding mix if they are to meet Basel III liquidity requirements and retain their coveted AA- credit ratings.
The banks have been told to scale back their dependency on offshore funding, bolster deposit levels and lengthen the duration of their wholesale funding.
Fitch warned the steps are especially necessary after the Australian Prudential Regulation Authority (APRA)earlier this week declined to push back the planned 2015 start date for new liquidity rules.
APRA's decision prompted Fitch to warn Australia's banks that they will have to meet liquidity coverage ratio targets by 2015 and net stable funding ratio targets by 2018, despite the revised Basel rules allowing phased implementation.
“Their reliance on wholesale funding, particularly from offshore markets, is high compared with international peers,” Fitch senior director Tim Roche said in a statement. (here).