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.
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
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
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
AUD is firm through the morning: Bonds are soft: XJO gapped higher at the open but has faded ever since: Big Iron is mixed: Dalian soft: Big Gas too: There are signs of life in Big Gold. I am still unconvinced beyond a small counter-trend rally: Big Mortgage is still under selling pressure. It gapped
Karen Moley puts lippy on the banking pig today: …there’s no doubt that the Hayne royal commission – which has forced the banks to crack down on some of their lax lending standards and to forsake some of the suspect fees they’ve been happily pocketing for years – has played some role in this sell-off
Via NAB comes more news to upset the banks:
It’s both riveting and horrible watching the major bank’s abort the next round of regulatory reform before it is even born, from The Australian: The word on the street is that Jacinta Ellis, a 12-year APRA veteran and a senior manager in the legal group, has defected to National Australia Bank, taking up a regulatory affairs
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
Via Martin North:
There is no stopping it. Australia’s major banks are in a monster bear market. CBA and ANZ are down 28%, NAB is down 30% and WBC is down 33%: CBA and WBC have both broken monthly chart support and are in free fall. They appear to have much more downside. The triggers are obvious in
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.
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
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
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
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
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
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
Given the clear move by corrupt media and regulators to curtail royal commission fallout, this is good policy and politics from Labor, at The Australian: Labor will hold its own meetings around Australia with aggrieved bank customers from today, in a bid to put pressure on the government to extend the banking royal commission hearings
APRA and ASIC may be the one’s left carrying the bag for Australian bank’s housing bubble excesses but they had good company in the RBA and Treasury. Following the GFC the RBA openly declared that Australian household debt was a clear and present danger to the economy yet when its mooted thirty year mining boom
The answer is “no”. There will be no explicit depositors bail-in. In would be political suicide. That said, there are any number of ways that deposits can be devalued: printing money, special taxes etc. And that is the path that Australia will take.
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
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
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
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
This week on the MB Fund podcast we have a timely chat to friend of MB, Philip Soos, who is an independent economist, PhD candidate investigating bank crime and mortgage control fraud and co author of the book, Bubble Economics – Australian Land Speculation 1830 to 2013 with Paul Egan. Below is the performance of
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
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
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
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
More good work from Lyndsay David today as APRA fails to cough up an FOI request: APRA ordered the “targeted review” in October 2016. It was conducted by PWC for WBC and CBA: Background Under its supervisory powers, APRA is able to request banks to commission special purpose (or “targeted”) reviews into topics on which
