APRA proposes phasing out AT1 bonds by 2032 to enhance bank capital stability, starting Jan 2027.

The Australian Prudential Regulation Authority (APRA) proposes phasing out Additional Tier 1 (AT1) bonds by 2032 to enhance bank capital stability during crises. Starting January 2027, banks will replace these hybrid securities, valued at $43 billion, with more reliable and cost-effective capital forms. This initiative aims to bolster confidence in the safety of deposits and simplify the capital framework, addressing financial stability risks linked to retail investor ownership of hybrids.