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.

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Even vultures won’t touch stinking Melbourne McMansion carcass

At Domain: Fuelling the forecast rise in defaults is a reluctance by the non-bank lenders to extend credit. Some have now drawn up “no go” lending zones across Sydney and Melbourne. Allen Walker, a partner at receiver and manager Cor Cordis, said he is anticipating more business will come from loan defaults in the coming

20

ATO threatens to drop tax debt bomb on specfestor tradies

Via Banking Day: The Australian Taxation Office can disclose tax debt information to credit reporting agencies, following the passage of a tax bill last week. Under normal circumstances, it is an offence for a taxation officer to disclose protected information that has been acquired by them as a taxation officer. Under the new law, included

1

UBS: BOQ cuts divvy again

Welcome to the future of Aussie banks, via UBS on UQ: ONE LINER NPAT miss on higher Bad Debts. Dividend cut for the second consecutive half. KEY NUMBERS (FY19) FY19: (1) Cash NPAT down 14% to $320m (Cons. $330m); (2) Cash basic EPS down 16% to 80cps (Cons. 81cps); (3) Final 2H dividend 31cps (Cons.

1

Mortgage arrears fall on rate cuts

Via S&P: Australian prime home-loan arrears fell in August. That’s according to S&P Global Ratings’ recently published “RMBS Arrears Statistics: Australia.” The Standard & Poor’s Performance Index (SPIN) for Australian prime mortgages declined to 1.41% in August from 1.49% a month earlier. While arrears typically fall at this point in the annual cycle, the magnitude

4

Why the banks are still a big, fat sell

Treasurer Josh Frydenberg announced Monday an ACCC investigation into the banks not passing on interest rate cuts. I think the investigation will make a nice addition to ACCC’s bookshelf. They can file it next Rudd’s FuelWatch and Grocery Code of Conduct. The biggest question is whether the investigation is designed to be a distraction from

2

Recessionberg’s budget surplus begins great unwind

Via Domain: The federal budget has had a $2.3 billion hole punched in it by lower-than-expected company tax collections and Australians eager to get their hands on the first stage of the Morrison government’s personal income tax package. Figures from the Finance Department covering the first two months of the 2019-20 financial year show company

9

Recessionberg launches bank inquiry into self

It’s never enough bubble for Joshy Recessionberg: The big four banks will be ­officially investigated for their repeated failures to pass on the full extent of central bank rate cuts to consumers under a government-launched probe into home-loan gouging. Josh Frydenberg has directed the Australian Competition & Consumer Commission to investigate the pricing of residential

14

Banker kings move to control RBA and Treasury

Via the AFR: Shayne Elliott, the chief executive of one of the country’s biggest banks, has called on federal Treasurer Josh Frydenberg to convene a summit to discuss the broader economic implications of zero per cent interest rates and quantitative easing. Mr Elliott, who is the CEO of ANZ Banking Group and chairman of the

21

Global investors flee Aussie banks

Via Martin North: Australian banks are having their toughest time attracting investors, according to new analysis from Copley Fund Research, which monitors flows in funds with $1.2 trillion under management. An exodus by fund managers has left 91% of the 430 funds in Copley’s global analysis with zero exposure to the sector. That’s the lowest take-up on record. On average,

4

Big banks to cut dividends as rorts reverse

Yesterday ANZ warned: Today there are other warnings, via Banking Day: ANZ Bank is under pressure to cut its final dividend after it revealed another blowout in customer remediation costs. …ANZ yesterday came under fire for not giving precise details on the nature of the recently identified remediation cases or any information on how many

10

Banks’ offshore bond issuance hits all-time high

The Australian Bureau of Statistics (ABS) recently released its National Financial Accounts for the June quarter, which revealed a 0.5% quarterly rise in Australian banks’ gross external liabilities (offshore borrowings), but a 0.6% decrease over the year. Bonds (+$8 billion), Loans (+$7 billion) and Other (+$5 billion) drove the quarterly rise in offshore borrowings by

6

Evil Anna trashed responsible lending push

So says The Guardian in an “exclusive”: A heavy campaign of lobbying by Australia’s banks preceded the treasurer, Josh Frydenberg, telling financial regulators not to enforce responsible lending laws “too stringently”, Guardian Australia can reveal. Regulators have been left with whiplash by a sudden change in the tone of government remarks over the past month,

5

NAB warns, banks slapped

Via NAB: Ken Henry claw backs anybody? Not happy: UBS’ Jon Mott sums it up nicely: From Credit Crunch to Housing Boom in 4 months! A lot of good news priced in While the pick-up in lending is positive, bank fundamentals are increasingly challenged with ultra-low interest rates. Given the falling BBSW, we expect the

7

NAB replicates specufestor rate cut

At Domain: NAB followed CBA by saying it would cut rates for owner-occupiers and investors paying principal and interest by 0.15 percentage points. It will cut rates on interest-only loans for investors by 0.3 percentage points. As we said in our last quarterly report, interest-only loans have been so de-risked that they are now an

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CBA keeps half of RBA cut unless you’re specufesting

It’s all aboard the specufestor train now: In a move that is likely to influence other banks’ pricing, CBA on Tuesday said it would lower rates by 0.13 percentage points for all owner-occupiers and for property investors who are paying principal and interest on their loans. Property investors with interest-only loans will receive the full

18

Open banking the next threat for majors

Via Ian Verrender at the ABC: Ever paid a hotel bill overseas with an Australian credit card and later been gobsmacked by the fees gouged from your bank account? Perhaps you’ve transferred money offshore to a relative and, after being forced to hand over a large percentage of the total, wondered whether you’d just been

22

Fasco-housing complex guts ASIC HEM push

Yesteray Generalissimo ScoMo ordered more mortgages, at the AFR: Scott Morrison says Australia’s banks must not shy away from lending after the Hayne commission as he pushes back against what he calls an “instinctiveness” in society towards responsible lending standards that are too onerous. Speaking to the Australian American Association in New York, the Prime Minister

21

Generalissimo ScoMo orders more mortgages, CBA obliges

The fasco-housing complex is running hard today at the AFR: Scott Morrison says Australia’s banks must not shy away from lending after the Hayne commission as he pushes back against what he calls an “instinctiveness” in society towards responsible lending standards that are too onerous. Speaking to the Australian American Association in New York, the

0

Lenders shun high-rise property developers

Loan-to-value ratios (LVRs) employed by Australia’s larger non-bank lenders when advancing funds to property developers have fallen from a high of 72% in 2017 to an average of 65%, according to law firm Ashurst. Whereas the major banks have also reduced their exposure to residential apartment developers by more than half over the past three

10

Council of Financial Regulators busy “monitoring”

Always watching, watching watching, never doing: At its meeting on 18 September 2019, the Council of Financial Regulators (the Council) discussed risks facing the Australian financial system, regulatory issues and developments relevant to its members. The main topics discussed included the following: Financing conditions and the housing market. Council members discussed credit conditions and recent developments in