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Home» About Macquarie Group» Investor Relations» Debt investors» Unsecured Funding» MGL and the Non-Banking Group» MGL capital and regulation

Investor Relations

MGL capital and regulation

As an Australian Prudential Regulation Authority (APRA) authorised and regulated Non-Operating Holding Company, Macquarie Group Limited (MGL) is required to hold adequate regulatory capital to cover the risks for the whole Macquarie Group, including the Non-Banking Group. Macquarie and APRA have agreed a capital adequacy framework for MGL, based on Macquarie's Board-approved Economic Capital Adequacy Model (ECAM) and APRA's capital standards for ADIs.

MGL's capital adequacy framework requires it to maintain minimum regulatory capital requirements calculated as the sum of:

The Banking Group's minimum Tier 1 capital requirement, based on a percentage of risk-weighted assets plus Tier 1 deductions (using prevailing APRA ADI Prudential Standards); and
The Non-Banking Group capital requirement, calculated using Macquarie's ECAM.

As at 30 September 2012 MGL had capital of $12.4 billion, $4.1 billion in excess of MGL's minimum regulatory capital requirements under Basel II.

Basel III

APRA is requiring Australian banks to follow an accelerated Basel III implementation compared to the Basel Committee’s gradual phase-in of Basel III, with a minimum Common Equity Tier 1 (CET1) ratio of 4.5% required by January 2013 and immediate phase in of additional CET1 deductions. In addition, APRA has added conservative overlays (‘super equivalence’) to the Basel Committee’s Basel III capital requirements.

Macquarie’s position at 30 September 2012 meets the APRA 2016 Basel III requirements, i.e. minimum ratios plus capital conservation buffer.

New transactions at Macquarie are now evaluated on a fully implemented Basel III basis, and all businesses are operating cognisant of Basel III.

Further information

For more information on Macquarie's ECAM model and MGL's capital base read the latest Management Discussion and Analysis.

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Macquarie only carries on banking activities in those countries it is authorised to do so. Macquarie Bank Limited (MBL) is authorised by the Australian Prudential Regulation Authority (APRA) in Australia to carry out banking business in Australia. Each of MBL, acting through its London branch, and Macquarie Bank International Limited, is authorised and regulated by the UK Financial Services Authority to carry on banking business in the United Kingdom. MBL, acting through its Seoul Branch, is authorised and regulated by the Financial Services Commission in Korea to carry out banking business in Korea. MBL, acting through its Singapore Branch, is authorised and regulated by the Monetary Authority of Singapore to carry out banking business in Singapore. MBL, acting through its Hong Kong branch, is authorised and regulated by the Hong Kong Monetary Authority to carry on banking business in Hong Kong.

Other than MBL, any Macquarie Group entity noted on this page is not an authorized deposit-taking institution for the purposes of the Banking Act 1959 (Commonwealth of Australia). That entity's obligations do not represent deposits or other liabilities of MBL. MBL does not guarantee or otherwise provide assurance in respect of the obligations of that entity, unless noted otherwise.

Macquarie Bank Limited maintains Representative Offices in the states of Illinois, New York and Texas, but is not authorised to conduct business in the US.