Another winner for the renovated and policy-driven Bill Shorten, from the AFR:
Federal Labor could hold a Royal Commission into the banking sector if it wins this year’s federal election.
A day after Prime Minister Malcolm Turnbull excoriated the banks for their culture of greed and warned they would lose their social contract if they did not clean up their act, Labor will go further and flag the inquiry should it form government. Labor leader Bill Shorten mounted the case on Thursday, just hours after the government ruled out the option.
He said Mr Turnbull was all talk and no action on the issue.
” I think Australians are sick of politicians who talk tough and do nothing. I think it’s frankly quite contradictory. Mr Turnbull is there giving some sort of lecture to the banks, then he wants to propose corporate tax cuts,” he said.
And from Fitch:
Fitch: Conduct Risk a Growing Threat for Australian Banks
Recent revelations about alleged conduct issues at a number of Australian banks highlight increased regulatory scrutiny of conduct and culture in the financial system. Fines, class-action law suits, increased regulatory oversight and remedial action are all possible outcomes from this push, says Fitch Ratings.
The alleged conduct issues cover a range of different areas including bank bill swap rate manipulation, claims payment problems in life insurance operations, and poor financial advice in wealth-management businesses. The emergence of conduct issues from other areas of the banks’ operations is also possible.
The current regulatory push should ultimately result in a stronger compliance culture within Australia’s banking system, which in turn should help limit similar issues occurring in the future. This is likely to take some time to filter through all levels of the institutions, while the more immediate impact would be banks suffering some reputational damage.
Penalties, fines and the cost of remedial action are unlikely to be meaningful relative to the size of the banks involved, and it is unclear as to what class-action lawsuits may emerge, the prospects for their success, and the ultimate cost to the banks. Nevertheless, these actions are likely to evolve over many years if they are undertaken – which, again, should help limit the financial burden of adverse findings on the affected banks.
Conduct risk has become an increasingly relevant issue for banks in other developed markets – including the US, UK and Europe – over the past several years. Conduct costs from regulatory fines and litigation-related expenses remained high for global trading and universal banks in 2014 and 2015. To date, the costs associated with conduct risk for these banks have been manageable at each issuer’s ratings level. However, resolution with the authorities is often only a first step, as civil cases can follow.
Hopefully Shorten’s RC will also cover the RBA, from Fairfax:
An Australian Reserve Bank subsidiary gave the go-ahead for a regional manager to bribe a Nigerian official to secure millions of dollars in new business, a UK court has been told.
Peter Chapman, the former director of business development in Africa for Melbourne-based polymer banknote firm Securency International, went on trial this week on corruption charges over the bribes.
He arranged for hundreds of thousands of dollars to be transferred to an official at the Nigerian Mint through a web of offshore companies and accounts, the prosecution told London’s Crown Court on Tuesday.
AdvertisementSecurency’s head office “was prepared to endorse the idea of a bribe if that meant they got the orders”, the prosecutor said.
