Major Australian banks will need as much as A$48 billion ($41.7 billion) to move to the top quartile of global banks, analysts estimate, after a government-backed review on Sunday called for stronger capital levels to ensure they can survive a global financial crisis.
While the review fell short of specifying the extent of the increase needed, it said capital levels at Australian banks needed to rise to 12.2 percent to be in the top quartile of international banks, from current levels of 10-11.6 percent.
Bell Potter, analyst TS Lim, said each bank would need A$10 billion to A$12 billion to make it to the top quartile.
The Australian Prudential Regulatory Authority (APRA) will take a final call on the capital charge for banks in a consultative process until March 31.
"Overall, Murray's recommendations around capital, while not entirely surprising, are a negative for the major banks," said Omkar Joshi, an investment analyst who helps oversee about A$1 billion at Watermark Funds Management.
"I would expect bank shares to underperform the market on Monday."
The review was chaired by David Murray, former head of Commonwealth bank of Australia.
In a note last month, credit rating agency Fitch Ratings estimated the Big Four could face a capital shortfall of up to A$53 billion ($44.1 billion) in the most aggressive scenario.