Via the AFR:
A showdown between the Australian Banking Association CEO Anna Bligh and Australian Securities and Investments chairman James Shipton has been set for next week as the industry body pursues approval for its new code of conduct, the Hayne commission has heard.
The looming showdown was revealed after a horror morning for NAB, where the self-described small business bank was exposed for taking the sale proceeds from a property and paying down another facility held with the bank despite having no right to.
The bombshell was thrown by counsel assisting Michael Hodge, QC, after counsel for NAB spent hours cross-examining small business owner Mr Ross Dillon, who showed his frustration as the line of questioning sought to cast doubt on his memory of events.
More:
An industry-commissioned review of the code by former ASIC executive Phil Khoury last year, called for the definition of small business to include loans up to $5 million. But the banks are lobbying hard for ASIC to sign-off on the code with a total credit cap of $3 million and an additional test for “annual turnover” of $10 million.
Surrounded by ASIC observers including banking regulator Michael Saadat – expected to give evidence on Friday – and ASIC’s chief legal officer Chris Savundra – the seasoned Bligh calmly made the case for the banks.
…Bligh warned that setting the line between “unsophisticated” retail customers and “large, capable, successful commercially” borrowers too high could limit the supply of credit, force up interest rates and put smaller lenders at a disadvantage to the big four banks.
“They feel distinctly uncomfortable at the $5 million,” Bligh told the commission. “That is more true of some of the non-major banks or banks that are smaller regional Australian banks who have smaller loan books … that will put them … at a competitive disadvantage against the four major banks,” she says.
Anything limiting the flow of credit to business seems to me a bad idea. It gets precious little of the bank’s books already.
For once I agree with Evil Anna but it will not save her soul, from Banking Day:
Bligh was determined to conflate a bank’s ability to lend with potential to lend, along the way blurring the distinctions between how a small business should be defined with how much a small business usually borrowed, and whether or not the advantage in risk weighting that the major banks, Macquarie and ING gained from accreditation, versus standard risk weightings.
Along the way, in a roundabout sequence of questioning, Bligh also conceded that the new ABA code of banking practice would not require compensation to be made for any direct financial loss or damage caused to an individual by a breach of the code, or make non-monetary orders obliging the subscriber to take a particular course of action to resolve the breach.
That’s the Evil Anna we know!
