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.

34

Dodgy lending class action “will not be the last”

Via Banking Day: The plaintiff law firm said the class action was being run in the Federal Court on behalf of people who, after 1 January 2011, were given “unsuitable loans” by Westpac, in breach of its responsible lending obligations. …Principal lawyer and managing partner with Maurice Blackburn, Ben Slade, said: “This case will seek

11

APRA sits on Macroprudential 3.0 egg

Via Banking Day: APRA fronted the Senate Economics Legislation Committee – better known as the Senate estimates committee – yesterday and covered a grab-bag of topics, with the overarching theme that this year will be a much tougher brand of regulation. APRA and ASIC will need to be tougher, in order to justify a raft

48

Westpac hit with class action over ‘irresponsible’ mortgages

By Leith van Onselen Westpac will face a class action in the federal court for issuing home loans that breached responsible lending rules. From SBS News: Westpac is facing a class action for allegedly giving loans to people who couldn’t afford to pay them back. The class action, in the Federal Court, is the first

14

90-day mortgage arrears hit record high

But records are made to be broken. Via S&P: Australian Prime Home Loan Delinquencies Rose In December; 90-Plus Days Arrears Hit Record High MELBOURNE (S&P Global Ratings) Feb. 20, 2019–Australian prime home-loan  arrears rose in December, according to a recently published report by S&P  Global Ratings. The Standard & Poor’s Performance Index (SPIN) for Australian 

6

Choice: Mortgage broking lobby already proving Hayne right

By Leith van Onselen The CEO of consumer advocacy group Choice, Alan Kirkland, has penned an enlightening article lashing the mortgage broking industry, claiming it is using the same dirty tricks deployed by the advice industry when it was forced to move from a commissions-based model under the FoFA reforms: Within hours of the final

9

Mortgage broker locusts swarm politicians

By Leith van Onselen The mortgage broker locusts continue to swarm politicians over the Hayne Royal Commission’s recommendation to overhaul mortgage broking from a commission-based to a user-pays system. The head of the country’s biggest retail mortgage broker, Aussie Home Loans chief James Symond, is mobilising brokers across Australia to lobby politicians to retain the

20

Westpac profit flatlines as 90+ day mortgage arrears surge

By Leith van Onselen Westpac has announced its Q1 trading update, which revealed a flat profit result: Westpac also posted a slight uptick in mortgage delinquencies: However, 90+ day delinquencies rose sharply, driven by WA: Whereas the share of interest-only mortgages fell sharply to 32% from 46% in September 2017:  

2

Voters trust Bowen over Frydenberg on Hayne

Via AFR: Many more voters trust Labor than the Coalition to implement the recommendations of the banking royal commission, according to a poll that also shows Josh Frydenberg and his rival Chris Bowen level-pegging as the nation’s preferred treasurer. The latest The Australian Financial Review-Ipsos poll, the first for this political year, shows almost half

14

Labor’s banker smash fires up ASIC

Do not expect any loosening of credit in this cycle, via AFR: The corporate regulator’s chief prosecutor, Daniel Crennan, QC, has warned the government has empowered him to pursue “extremely harsh civil penalties and criminal sanctions against banks, their executives and others” after the Senate passed tough new rules for white-collar offences. Corporate executives could

16

Consumer groups slam mortgage broker forum

By Leith van Onselen Consumer groups have lashed the mortgage broking industry for pretending to care about reform while vigorously lobbying politicians to protect their commissions. From SBS News: The consumer groups that were part of a forum with the mortgage-broking industry have quit en masse, citing a lack of progress and willingness to change.

21

Ken Henry leaves behind Australia’s least trusted bank

Via The Australian: Ken Henry is nothing if not staunch in his self-belief. His friends have often described him as the “great oak” – the stronger the wind blew, the harder he pushed back. For months since a disastrous appearance before the Hayne banking royal commission last year, Henry was convinced that he had done

14

ASIC prepares for HEM 2.0

Via AFR: The Australian Securities and Investments Commission (ASIC) has released updated guidance on how banks should verify customers living expenses before lending, to meet its expectations regarding the responsible lending laws. Lenders using the Household Expenditure Measurement (HEM) as a benchmark will need to apply a “reasonable buffer” reflecting the benchmark is too low.

9

Recessionberg tightens Hayne screw with new review

If you thought the banks were about release the spiggot on credit think again, via the AFR: The federal government has told the banks and regulators there will be a fresh industry inquiry in three years to ensure they have improved their behaviour and are treating customers better. Treasurer Josh Frydenberg wrote this week to

57

Labor pushes for massive banker penalties

From SBS News: Bankers found guilty of serious corporate crimes could be jailed for up to 15 years and shonky corporations may face fines of up to $525 million, under legislation proposed by Labor. In the wake of the damning banking royal commission, the federal party wants to significantly increase penalties against financial institutions who

10

Mad Macquarie backs mortgage brokers

Well…of course it does. It doesn’t have any branches to distribute its mortgages, via The Australian: Macquarie chief Shemara Wikramanayake has backed the role mortgage brokers play for borrowers, acknowledging that the Hayne royal commission would prompt smaller banks to rethink distribution and more closely ­assess what customers would pay for loans. Commissioner Kenneth Hayne’s

19

I hope ANZ doesn’t believe its own economist

It shouldn’t because he’s talking nonsense. Via Bluenotes: The fall in Australian house prices in 2018 was the largest since the financial crisis. But the implications for the broader economy are more important. It’s even possible that weaker house prices and a weaker economy combine into a negative feedback loop (although in my view this is unlikely). “All previous periods of declining

27

Macquarie hikes mortgage interest rates

Funny stuff in a carrion comfort kind of way, via AFR: Existing owner-occupier variable rates with principal and interest payments will rise by six basis points and those with interest only by 16 basis points. The hikes, which apply from February 21, impact all loan to value (LVR) bands. As mortgages and house prices crash.

24

Corrupt mortgage brokers launch absurd banking devils ads

This is a new low in political economy stupid: Mortgage brokers are a con. Their brand of competition is simply to destroy lending standards and fuel absurd property prices out of which they take massive and conflicted trailing commissions. UBS research found that brokers “a statistically significantly higher level of factual inaccuracy via the broker

32

Property Council PM backs mortgage broker locusts

By Leith van Onselen Prime Minister Scott Morrison gave a National Press Club address yesterday, where he defended the mortgage broking industry against the Hayne Royal Commission’s recommendation to overhaul mortgage broking from a commission-based to a user-pays system: “The mortgage brokers understand, with the cautious way we’ve responded to the report, that we understand

42

Alan Kohler: Let mortgage brokers die

By Leith van Onselen The mortgage broker locusts continue to swarm the Hayne Royal Commission’s recommendation to overhaul mortgage broking from a commission-based to a user-pays system. Mark Bouris – executive chairman of Yellow Brick Road – claims that the reforms will kill the mortgage broking industry, erode competition, and drive mortgage rates up: Buying

10

NAB should avoid Mike Baird like the plague

Mike Baird appears to be firming as the favourite to replace Andrew Thorburn as NAB CEO, via UBS: Following the negative comments by Commissioner Hayne in the Royal Commission Final Report NAB announced the resignation of both the CEO Andrew Thorburn and Chairman Ken Henry. NAB announced that well regarded and highly experienced Phil Chronican

1

Hayne reverses bus over Professor Harper speed hump

Professor Ian Harper has had better weeks. First, as the Reserve Bank’s micro-economic patsy, he was thrown under the interest rate bus to set up Phil Lowe’s elegant back flip with pike: The clearest indicators of ongoing momentum of Australia’s economy are strong employment growth and a rapid shift in the federal budget toward surpluses,