Australia on Tuesday proposed its banks conform to minimum capital requirements faster than global rules as expected, though the proposal is not seen pushing the well-capitalized banks to raise equity immediately.

The Australian Prudential Regulation Authority (APRA) in a discussion paper for the implementation of the Basel III regulations said banks needed to meet minimum capital ratios in full from January 2013 and capital conservation buffer requirements from January 2016.

Basel III, which is aimed at preventing another global banking crisis, wants lenders to hold a minimum core capital ratio of 4.5 percent and a capital conservation buffer of 2.5 percent by 2019.

Only a handful of countries have already announced how they plan to implement Basel III, with Singapore announcing the toughest rules so far calling for banks to hold 9 percent of minimum capital ratio.

Switzerland and China have set a core tier one equity ratio lower than Singapore's plan.

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.

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 ratio of just under 7 percent now.

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

Australian banks may go in for some dividend reinvestment plans given their penchant for holding surplus capital, analysts say.

ADI (Authorized 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.

APRA said it would amend its current 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.

(Reporting by Narayanan Somasundaram and Ed Davies; Editing by Vinu Pilakkott)

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