A few years behind the curve, but APRA got there...

As long-time readers will know, I have been banging on about this issue for years (I will not say exactly what--you can work it out). Good to see APRA actively embracing the critique (HT: The Australian):

THE financial services industry regulator has launched a major supervisory crackdown to prepare banks for the next crisis by discouraging excessive risk-taking in the "slow grind" local environment.

With no sign of abatement in the European sovereign debt crisis, Australian Prudential Regulation Authority chairman John Laker yesterday outlined a robust agenda that targets offshoring and outsourcing, and aggressive bank expansion overseas...

Mr Laker said that flat credit growth locally could introduce "temptations for greater risk-taking". "To date, the slow grind has not been incompatible with solid profitability, certainly for the larger banks, but such an outcome remains in prospect only if wise heads in (bank) boards and management continue to prevail," Mr Laker told a business lunch in Melbourne.

He also appeared to address ANZ chief executive Mike Smith's lament about constant capital demands, and that regulators had "no natural predators". In a clear reference to ANZ's bid for a 25-30 per cent group profit contribution from Asia by 2017, Mr Laker said the allure of more investment in higher-growth markets was apparent, with "some larger banks" setting earnings targets. Such investments, he said, needed to be supported by rigorous planning and enhancements in risk management. APRA supervisors would therefore test if the bank had a genuine competitive advantage, had undertaken appropriate due diligence, and whether the investment fell within the organisation's risk appetite, control frameworks and skills.