Wayne Byres' tougher capital rules have taken the risk of large equity raisings off the table,analysts said.Credit:Louie Douvis
The announcement also signals the end of a near decade-long process in building up resilience in the sector,a persistent source of market uncertainty.
Investors cheered the news,boosting shares in Westpac,Commonwealth Bank,National Australia Bank and ANZ Bank by 3 per cent or more,as the banks signalled they would be able to satisfy the rules without dramatic changes.
"The scenario where banks had to raise significant capital appears to be off the table for now,"said managing partner at Arnhem Asset Management,Mark Nathan.
Mr Nathan said the banks'highly prized dividends also looked"safer",though were not likely to increase. National Australia Bank and Westpac in particular have high dividend payout ratios,which could put dividends at risk from other factors,such as a rise in bad debts.