Australian banks will need to meet new global capital rules ahead of the internationally agreed timetable under proposals made on Tuesday, although the move is unlikely to force any of them to raise any new equity immediately.

The new Basel III rules, aimed at preventing another global banking crisis, require lenders to hold more capital aside in the form of equity, reserves and retained earnings in case of a sharp economic downturn.

Australia joins a handful of other countries including Switzerland, China and Singapore in outlining how they would implement the new capital rules, ahead of most of their peers in Europe and the United States.

The Australian Prudential Regulation Authority (APRA) said in a discussion paper that banks should meet the Basel minimum capital requirements by January 2013, two years ahead of the 2015 deadline set by global regulators.

Australian banks should then have a capital buffer in place by January 2016, three years ahead of the Basel timeline.

Basel rules call for a minimum core, or Tier 1, capital ratio of 4.5 percent, with a 2.5 percent capital buffer on top of that.

ADI (Authorised deposit taking institutions) in Australia are well placed to meet the new minimum capital requirements and APRA is therefore proposing to accelerate aspects of the Basel Committee's timetable, APRA said in a statement.

Australia's top four banks -- National Australia Bank , Commonwealth Bank of Australia , Westpac and Australia and New Zealand Banking group -- have a core tier I capital ratio of just under 7 percent now.

What this does is puts to rest any fears that capital raising is needed for the big four banks. The change in dividend treatment is a big boost, said RBS banking analyst John Buonaccorsi, referring to proposed rules that call for dividends to be deducted from capital only after they have been declared.

Currently APRA asks banks to deduct expected dividend payouts but is proposing to bring Australian banks inline with global rules. The change is expected to add 40-60 basis points to the capital ratio for each major bank.

The only worry is a likely capital surcharge for domestic systematically important banks, but the Australian banks are now well placed to absorb this surcharge, Buonaccorsi said.

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Australia's highly profitable banks are adding up to 50 basis points to capital annually, allowing them to glide through new rules easily.

APRA said it would also amend its current bank regulation policies in a number of areas, taking a stricter approach than at present in some but a less conservative approach in others.

It added it will undertake a second consultation in early 2012 on the detailed prudential and reporting requirements that will give effect to the Basel III capital reforms in Australia.

Shares in Australia's banks fell between 0.2 and 1.5 percent on Tuesday, in line with a 1.2 percent decline in the broader index <.AXJO>.

Only a handful of countries have already announced how they plan to implement Basel III, including Singapore which is also pushing its banks to meet the new rules several years ahead of time.

Switzerland and China have also set out their plans although most European and American regulators have yet to unveil their new rules.

Switzerland has said it wants to set a much higher capital buffer for its two biggest banks, Credit Suisse Group AG and UBS AG , which are facing an overall common equity requirement of 10.0 percent.

(Additional reporting by Rachel Armstrong; Editing by Vinu Pilakkott and Lincoln Feast)

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