Australian banks

MacroBusiness covers Australian banks from the perspective of their macro-economic role, as political economy actors, as investment propositions and in terms of financial stability and capital adequacy. Australian banks have played a crucial role in inflating the Australian property bubble, exist within an utterly privileged position as “too big to fail” institutions and operate within a deeply distorted financial architecture that has Australian tax payers well and truly on the hook in the event of trouble. MacroBusiness seeks to define this role for investors as well as change it in the name of the Australian national interest.

11

ASIC declares war on corrupt RBA and Treasury

And good on it, at Domainfax: Australian Securities and Investments Commission boss James Shipton has called for a radical increase in the regulator’s funding and slammed delays to legislation that will dramatically increase penalties against business crooks. Appearing at a parliamentary hearing in Canberra, Mr Shipton made his strongest speech since being appointed to the

6

Macquarie: Here comes jingle mail

Macquarie is today arguing that a 15-20% fall in house prices would plunge 310,000 home owners into negative equity and would cost the banks roughly $6bn in legal costs and remediation owing to breaches in responsible lending laws. That is, jingle mail: For legal actions to eventuate, a customer would need to have suffered a financial loss

10

Unquestionably dodgy: Aussie banks slammed in global report

Via Banking Day: If Australia’s major banks have retained any vestiges of complacency, that will be rubbed out by the comments from the Lafferty Banking 500, which rated 500 banks from 73 countries for their overall quality. The report card from Lafferty’s team of analysts ranked three of the four majors as substandard versus their

7

Fitch: Trade wars and regulation threaten Australia’s house prices

No shit, Sherlock: Housing Risks Re-Emerge Wilting house prices have prompted 50% of Australian fixed-income investors to nominate a domestic housing market downturn as the top risk to Australian credit markets over the next 12 months. While regulations and tighter lending standards have played their part, external threats posed by trade wars also loom and

6

To smooth Hayne reforms banks should sack Anna Bligh

Anna Bligh is back in the news at the AFR: The Australian Banking Association will outline ambitious plans to ban commission payments linked to legacy financial advice products, promise to stop charging dead customers and end the fees-for-no-service rort with a suite of changes to the banking code of practice to be announced on Wednesday.

13

ANZ issues profit warning

Via the FT: The bank warned its full-year cash profit would be hit by A$697m ($492m) in costs related to customer remediation, software, restructuring and Australia’s public inquiry into the finance industry. The hit to profit from those items reflected a year-on-year increase of A$545m for the twelve months to the end of September.  The remediation

10

As Chairsatan Lowe protects criminal banking, RBNZ toughens stance

Via Banking Day: The new and popular Bank Financial Strength Dashboard of the Reserve Bank of New Zealand may be extended to include “conduct” metrics, Toby Fiennes, head of prudential supervision, told an accounting forum last week. “In the wake of the recent Australian Financial Services Royal Commission’s interim report, there is much focus on

4

How banks thanked taxpayers for their GFC bailout

The AFR operates in a permanent state of cognitive dissonance. On the one hand it is supposed be all for “markets”. On the other it is the number defender of private vested interests in the country. This is no more clear than in its panicked propaganda campaign in recent weeks supporting Australian bank exceptionalism during

31

PIMCO warns on bank debt as housing busts

Via PIMCO: Australian housing prices have fallen for 15 consecutive months. The nationwide all-dwelling price index was down 2.0% year-on-year in August, with Sydney prices down 5.6%. This was Australia’s first nationwide housing price decline in six years. To be sure, prices remain 40% higher than levels in 2012, when abundant credit supply and strong

26

A quick list of the crimes Chairsatan Lowe aims to protect

From the Herald Sun comes a nice list of financial crimes. Charging dead people: In April the commission revealed the sordid details in which planners from Commonwealth Bank subsidiary Count Financial profited for years from dead customers’ fees. In the worst case revealed, a planner knew a client had died in January 2004, but was

5

Now for some pro-cyclical mortgage tightening at spooked banks

The AFR is today describing what will very likely become the next round of mortgage tightening, risk-aversion in banks: A major bank has a blacklist of 6700 apartment projects across Australia where buyers are refused loans or are offered reduced loan to value ratios (LVR), according to mortgage broker Home Loan Experts. …The reasons for

22

Kenneth Hayne opposed to extending banking royal commission

By Leith van Onselen With the interim report into the banking royal commission released on Friday, Labor has called for an extension beyond the next election to ensure that more victims are heard and that the next federal government has the opportunity to implement the recommendations. From 9News: The opposition is concerned not enough victims

16

Why the royal commission could end the property bubble

By Leith van Onselen The interim report into the banking royal commission was released on Friday, which admonishes the greed inherent across Australia’s financial system and the lack of oversight by our captured financial regulators. Below is the Executive Summary: The Commission’s work, so far, has shown conduct by financial services entities that has brought

6

APRA releases wet lettuce bank stress test results

APRA has released its Insight Issue 3 2018, which contains the following explanation of its latest bank stress test results: Stress testing plays an important role for both banks and APRA in testing financial resilience and assessing prudential risks. This article provides an overview of APRA’s approach to stress testing, with insights into how APRA developed the

10

APRA orders urgent restock of wet lettuce

Via The Australian: A horde of Australia’s biggest ­financial institutions and super­annuation funds have been forced by the prudential regulator to ram through an in-depth review of their culture and governance before the royal commission ends next year. After copping heavy criticism over the course of Kenneth Hayne’s royal commission over a lack of enforcement

20

Westpac warns

And so it begins: The key elements include: Increased provisions for customer refunds associated with certain advice fees charged by the Group’s salaried financial planners due to more detailed analysis going back to 2008. These include where advice services were not provided, as well as where we have not been able to sufficiently verify that

37

Why won’t Kenneth Hayne extend the banking royal commission?

By Leith van Onselen With the interim report into the banking royal commission due to be released tomorrow, Labor continues to pressure the Morrison Government to extend the inquiry: Labor says only 27 victims have so far had their stories heard, out of more than 9300 submissions. “If the banking royal commission needs to be

18

Frydenberg threatens jail for bankers

Via The Australian: The seven heavy volumes of the Hayne royal commission’s interim report will land with a thud on Josh Frydenberg’s desk tomorrow. They will call for much higher standards governing bank lending practices and stronger criminal penalties for breaches. The Treasurer is on the front foot, announcing draft legislation yesterday that would impose

39

Professor: Royal commission to smash banks, mortgage brokers, credit

More great work from Martin North today as he discusses the fallout from the Hayne Royal Commission with Professor Gill North: The conclusions are sobering for banks, brokers, regulators and credit provision going forward. The violations of responsible lending laws includes: inappropriate use of high risk and interest-only loans; failure to obtain data for loan