Seed Funds Management director Nicholas Chaplin has argued against the potential ban on bank hybrids, emphasising the stability of Australian banks and the importance of hybrids as a capital source.

It comes as the Australian Prudential Regulation Authority revealed its intention for banks to phase out their use of hybrid capital.

“I don't think it's necessary at all. They've functioned very well for 25 years,” Mr Chaplin told Sky News Business Editor Ross Greenwood.

“Yes, they've got franking in it and yes, I would suggest a much lower proportion of retail investors than APRA considers, about 15 per cent. And those people tend to be advised. They buy these instruments because they trust the banks in Australia. And that's a credit to APRA.”

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