How Will Basel 3 and Associated Regulatory Changes Affect the Investment Strategies of Superannuation Funds

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There are significant inter-connections between the banking and superannuation segments of the Australian financial services industry. Superannuation funds use an extensive range of bank products and services, from transactional banking, cash management and custodial services, to hedging and investment products.

Superannuation funds also invest significant sums of money in banks – in deposits, in a variety of bank securities, and in bank stocks. As an economy that has historically had an under-developed domestic bond market, Australia has relied on the intermediation of banks to fund the economy, ensuring that trends in banking are highly pertinent for the investor community.

As a consequence, when major regulatory changes emerge within the banking system the impacts will not be quarantined to the banking sector alone, but will affect superannuation funds in their capacities as both bank customers and investors.

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This paper was presented in July 2013 at the 18th Melbourne Money and Finance Conference (MMFC), which explored the theme Financial Sector Evolution – Prospect and Determinants.

For more papers presented in the conference, please click here.