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.
Via the ABC: Treasurer Josh Frydenberg has revealed an “implementation road map” around the 54 recommendations from the financial services royal commission that called for Government action. The final report from commissioner Kenneth Hayne made 76 recommendations, 54 of which were directed at the Government, which has been accused of dragging its feet in response to the
From its quarterly update this morning: Still low but on the march upwards. It should keep getting worse with the economy. It’s the same story as other banks, entering zombie status as rising provisions meets low credit growth.
Via the AFR over the weekend: The Australian Prudential Regulation Authority is looking for a new head of policy and advice, following the resignation this week of Pat Brennan, who had responsibility for developing the regulator’s policies on banks, insurers and super funds. Mr Brennan’s surprise resignation after more than eight years at APRA creates
Via Martin North: ANZ today provided an update on credit quality, capital and Australian housing mortgage flows as part of the scheduled release of its Pillar 3 disclosure statement for quarter ending 30 June 2019 and associated chart pack. Given the strategy was to shed a portfolio of businesses and focus on the Australian retail market, we
There is one reason to think so today, via AFR: Westpac Group is set to follow up its landmark victory against ASIC on responsible lending with sweeping changes to home lending policies that include more rigorous assessment, deep diving into household spending, and new debt-to-income analysis of higher-risk loans. The bank is also planning to
Via S&P: Australian prime home-loan arrears remained steady in June, with the Standard & Poor’s Performance Index (SPIN) for Australian prime mortgages slipping 1 basis point to 1.51% from a month earlier. That’s according to S&P Global Ratings’ “RMBS Arrears Statistics: Australia,” published today. Arrears typically decline in June and throughout the third quarter. Mortgage
More from Martin North: Martin has been behind the curve on the rebounding market so is probably looking for an excuse to catch up. It’s still not clear to me that the ASIC judgement will end private class actions. Nor that ASIC will be forced to dump any of its HEM reform. That said, you’d
Via Martin North: The key question now is will the banks revert to their previous practices of doing little to validate household spending patterns as part of the mortgage assessment processes. Some are already saying “buy now” with renewed vigour. The Royal Commission revealed last year that some lenders ignored household expense data favouring the
Via the ABC: The Federal Court has dismissed ASIC’s responsible lending case against Westpac and ordered the regulator to pay the bank’s costs. ASIC had alleged that Westpac breached responsible lending laws on up to 262,000 home loan approvals made using an automated process that relied on the Household Expenditure Measure benchmark, rather than using
It’s all so predictable. Just months out from the prolific criminality exposed by the Hayne Royal Commission, the rentiers are back. Via the AFR: The founder of Aussie Home Loans, John Symond, says the housing market has turned a corner but both he and ANZ Banking chief Shayne Elliott believe that ‘over-regulation’ could threaten its
Earlier this month, the Federal Chamber of Automotive Industries reported that annual new car sale had hit the lowest level since November 2012: Today, The AFR blames part of this decline on tightening automotive credit: In a post-royal commission world, where the banks are struggling to come to grips with what “responsible” lending really means,
Some brouhaha around this in Denmark: Jyske Realkredit is ready with a fixed-rate mortgage with a nominal interest rate of minus 0.5%. Yes, you read right. You can now get a fixed-rate mortgage with a maturity of up to 10 years, where the nominal interest rate is negative. However, you are not exactly going to make money
Recall from last month: Slater and Gordon has widened its class action case against National Australia Bank to include people who were sold personal loan insurance. The firm’s class action issued in 2018 on the back of the Banking Royal Commission argues thousands of NAB customers were sold worthless credit card insurance they would never
She’s probably Australia worst public policy sell out. And she’s earning her $600k plus, via Banking Day: The Australian Banking Association is preparing to push back against ASIC’s plan to make responsible lending guidelines more prescriptive, and will argue for the maintenance of the principles-based approach when the regulator holds public hearings on the issue
A speech from the Dead Man of APRA today: Good morning. I am very pleased to be part of this event, and to lend my support to the Banking & Finance Oath and to Finsia, both of whom are playing important and timely roles highlighting the importance of trust and professionalism for a successful financial
Profits down sharply: Revenues down. NIM down and deteriorating despite holding back rate cuts. Leading weak: Costs up: Provisions up: Credit quality and capital OK: That is a shit result. I have no idea if the market will rise or fall on the dash for trash but at 16x forward earnings this zombie bank is
Via banking legend Ian Rogers: CBA’s full year result for June 2019 on Wednesday will be doing well to carry much good news. Post-royal commission it’s running at 0.5 times system on retail deposits, and margins are preserved for now only by the bond rally. Mortgage growth is a bit better than system, with Commonwealth
From top policy doyen, how did it come to this? Via Domain comes secret minutes of NAB meetings five months out from the royal commission: …The EY team needed to know what [Ken] Henry thought so it could help the bank prepare a report, required by the Australian Prudential Regulation Authority (APRA), that would assess
And so it begins. Market prices crack first. Later comes the economic fallout. We had the price bust now for the casualties, via The Australian: The collapse of the prolific east coast suburban apartment developer Ralan Group, headed by British-born William O’Dwyer, owing creditors at least half a billion dollars has highlighted the fragile state
APRA is out with monthly banking statistics for June, the first clean post-election month. The news is investment mortgages are still on the nose. The stock of loans is still falling: ANZ CBA MQG NAB WBC BOQ BEN SUN Total Jun-19 76774 133761 12643 104660 153525 11340 12811 11756 517270 May-19 77473 133400 12532 104681 153096
The Australian Securities & Investments Commission (ASIC) has launched about 25 cases against banks in the wake of the financial services royal commission. ASIC commissioner Sean Hughes says further legal action is pending, and he says it is possible that further misconduct and wrongdoings in the financial sector will emerge. Hughes adds that banks are
Via S&P: Genworth Australia Ratings Lowered To ‘A’ Under Revised Criteria; Outlook Stable • We view that Genworth Australia’s constrained business diversity and challenging market conditions make it increasingly susceptible to competitive pressures, as reflected in a decline in revenue and earnings over recent years. • We are lowering our ratings on Genworth Australia to
Via Domain: The number of people searching for investor loans doubled in the week after the June rate cut, compared to the week before, on comparison platform Finder. …“The doubling of traffic is definitely a significant result there – the interesting thing will be to see whether it has any result in the market,” Finder
Dearly, deary me. APRA is in the fight of its life yet its executive is already dead. At the AFR: Investors are threatening to vote against bonuses calculated under the prudential regulator’s new executive pay rules, putting them on a collision course with the boards of the major banks. Former National Australia Bank chairman Michael
Deary, deary me. They’ve all lived such lives of entitlement that really don’t know anything about public service at all. It’s all about drawing a preposterously large salary, which undermines the culture of public service in the first place, and then protecting it ahead of the public interest. To wit, the AFR’s conservative attack dog,
Via Banking Day: Messing around with home loan pricing and promotion in a manner loathed by regulators, Westpac has sweetened home loan incentives by almost doubling the rate discount offered to new home buyers that take out a packaged mortgage deal with the bank. In a move likely to trigger responses from the three other
Time to go, mate. Via the SMH: A rare public intervention from banking royal commissioner Kenneth Hayne could be aimed at ensuring his recommendations are not watered down by financial sector lobbying, former watchdog Allan Fels says. …In a move that adds to pressure on APRA, on Monday commissioner Hayne made his first public comments
Via Assistant Governor of Financial Market madness at the Lunatic RBA today: The Committed Liquidity Facility I’d like to thank Bloomberg for the opportunity to speak to you about the committed liquidity facility (CLF). The CLF has been in place now for almost five years. As we announced in June, after a careful review, the
It had better be. The last time Australia found itself coming out of a housing correction in 2011, MB warned that APRA should tighten macroprudential policy. Instead it waited five years and the rest is bubble history. In part APRA was slowed by the Lunatic RBA which very unwisely campaigned against macroprudential for years. This
Via Banking Day legend Ian Rogers: Arriving with baggage of his own making, Ross McEwan, NAB’s pick as its next chief executive, faces a complicated return to Australian banking. During his 4.5 years as CEO at Royal Bank of Scotland, McEwan’s handling of the bank’s recent legacy around “constructive defaults” may dog the new bank
