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.

10

A healthy dose of fear is precsiely what is needed, Gotti

More Gotti rent seeking today: Fear is suddenly driving the actions of a large rump of Australians. It is seen most clearly in the housing and apartment markets of Sydney and Melbourne. To a lesser degree, that housing fear infects most other mainland capitals. …For years people thought lower dwelling prices would attract first home

10

ACCC, APRA and ASIC war over bank gouging

Via Banking Day: The Australian Competition and Consumer Commission has called out the big banks for gouging an extra $1.1 billion a year from thousands of interest-only borrowers, but has baulked at recommending action to fix the problem. The four major banks controversially repriced their interest-only back books by an average of 32 basis points

35

When will falling house prices choke the banks?

To understand this question we first need some bank capital 101 from MB’s banking insider, Deep T: There are two ways an Australian Deposit taking Institution (“ADI”) calculates capital to be allocated against a residential mortgage. Either in accordance with APRA’s APS 112 Attachment C or under Advanced Basel II methodology. Let’s address the rather simple APRA

33

It’s the recession you have to have, Gotti

Via Gotti today: I have described previously how at the dramatic FINSIA regulators’ lunch in Melbourne it was clear that the Reserve Bank, APRA and ASIC, in their desire to quickly improve bank balance sheets, had little understanding of the downturn they would create and its implications. But the share market now fully understands the

84

Politico-housing complex implodes

It is a laugh a minute now for the politico-housing complex. First up the RBA, which “economists” say was actually bullish last week: Economists believe the market misinterpreted comments by Reserve Bank of Australia deputy governor Guy Debelle, whose speech on Thursday was received as dovish but in fact was “frank” and consistent in substance

22

Shorten again endorses negative gearing reform

Via the AFR: As Sydney and Melbourne house prices continue to fall, Mr Shorten signalled that an originally planned July 1, 2019 start date could be deferred until 2020. He said Labor remained committed to its three-year policy of reforming negative gearing to make the system fairer for first-home buyers against investors who now receive

11

Mortgage broker parasites swarm Hayne reforms

Via Banking Day: Australia’s mortgage broking industry is preparing to engage in the 2019 Federal Election campaign, with plans to enlist support from home borrowers who want lenders to continue paying commissions. Large aggregator groups such as AFG, Loan Market and Connective are already encouraging affiliated brokers to lobby against proposals advanced by Commonwealth Bank

7

Always the last to know, ratings agencies celebrate Straya

S&P deluded: Key takeaways − A weakening in government support remains a possibility, but we see a recent regulatory proposal on increasing banks’ loss-absorbing capacity as an indication that support is likely to remain high. − Economic imbalances remain elevated. However, low credit growth and small falls in house prices in the past year suggest

10

When Albrechtsen and I agree, Ken Henry must go

Because I agree with Janet on nothing but this: …last week former Treasury boss, now National Australia Bank chairman, Ken Henry delivered a pretentious and prolix lecture, pointing the finger for corporate misdeeds at “the state of capitalism”. “The capitalist model is that businesses have no responsibility other than to maximise profits to shareholders,” he

9

Mad Macquarie sucked into mortgage crackdown

Via the AFR: Suncorp is attempting to improve insights on living expenses and lending on mortgage borrowers by requiring a minimum of three months statements for all credit liabilities, including home and personal loans, overdrafts, lines of credit and any other loan facility statements. …Macquarie Bank customers will need to be able to demonstrate they

24

Coalition offers fund raiser for Hayne response insights

Talk about not getting the memo: Assistant Treasurer Stuart Robert will headline a Liberal Party fundraiser that promises political donors an insight into the government’s potential response to the banking royal commission. …”It’s appalling and disgusting that after voting against a banking royal commission 26 times, Scott Morrison and the Liberals now want to make

25

ANZ admits to HEM abuse in mortgage approvals

By Leith van Onselen Appearing before the banking royal commission in its seventh and final round of hearings, ANZ CEO, Shayne Elliott, admitted to being a serial abuser of the Household Expenditure Measure (HEM) – a relative poverty measure – in lieu of a comprehensive credit assessment, but also vowed to significantly wind-back its use to

13

Chris Joye climbs aboard the Big Australian Short

In the movie The Big Short, hedge fund manager Michael Burry (played by Christian Bale) is the man that looks inside sub-prime RMBS and discovers nothing but a mess of toxic assets. Chris Joye did something similar on Friday: One of our best “short” (as opposed to “long”) ideas this year has been to bet

9

Captured APRA to muscle-up to banks (and deliver global peace)

So says a humiliated Wayne Byers, via Banking Day: A more frequent use of sanctions by APRA is on the cards, the regulator’s chair, Wayne Byres, told the banking royal commission yesterday. An afternoon of questioning of Byres was centred on themes of remuneration and bank culture and APRA practices in challenging boards over executive

38

Ken Henry is right, and should resign because of it

From Chanticleer today on the royal commission: Orr asked Henry what roll the Australian Prudential Regulation Authority should be doing to be satisfied that boards are ensuring their companies have a strong risk culture. “I don’t know whether this is the appropriate forum to say, but I will say it here now anyway,” Henry said.

3

S&P: Mortgage arrears rise in NSW and VIC

Via S&P: Australian prime home loan arrears fell in September, according to a recently published report from S&P Global Ratings. The Standard & Poor’s Performance Index (SPIN) for Australian prime mortgages, declined to 1.33% in September from 1.36% in August. Arrears typically fall at this point in the annual cycle, though the current arrears level

29

RBA warns on non-bank mortgage credit crunch

From Christopher Kent, Assistant Governor RBA (Financial Markets): Introduction Good afternoon, and thank you to the Australian Securitisation Forum for their invitation. It’s a pleasure to be here. Today I’ll provide an update on developments in the markets for housing and housing credit. These markets are closely related and both are of considerable interest to those

10

NAB/ASIC corruption exposed

Via Banking Day: CLEARLY DEFICIENT: ‘No saving NAB this time’ ASIC chair James Shipton did not quite tell Rowna Orr (pictured) at the banking royal commission. NAB’s inability to fully remedy illegal conduct in the foreign exchange market was laid bare in Friday’s hearing of the royal commission into misconduct in banking. In December 2016