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.

24

Deposit growth is falling fast

This morning APRA released its January banking statistics and it is no surprise to see the downtrend in deposit growth being entrenched. In January deposits grew just 0.23%: Year on year growth is falling fast, down now to 7.3%: Total deposits are leveling off: This will be the combination of the income blow from the

17

We must bail-in the creditors

Recently I’ve read and heard opinions expressed that securitisation, particularly residential mortgage backed securities (“RMBS”), are no longer relevant to the Australian financial system. Nothing could be further from the truth. RMBS is central to maintaining the solvency and liquidity of all banks/ADIs in Australia and cometh the offshore credit squeeze are likely to be

17

APRA gets it right on RMBS liquidity

From the AFR, APRA head John Laker last night snuffed out hopes that RMBS may be included in an expanded basket of qualifying assets for Basel III liquidity requirements for banks: “The discretion to add additional assets is qualified by the fact that these assets … must have a proven record of a reliable source

0

Much ado about nothing in out-of-cycle rate cuts

It is not always easy to determine bank funding costs. They’re complex. The AFR is very excited today about the prospect of out-of-cycle rate cuts from major banks: “Potentially, we could see out-of-cycle interest rate cuts, but not in the near, near future,” Morningstar bank analyst David Ellis said. “It depends on how offshore, wholesale funding

5

Genworth LMI claims still “elevated”

From Banking Day: Claim levels on the mortgage insurer Genworth Financial remain “elevated”, the company said yesterday. Claims by insured home-loan funders were A$71 million in the December 2012 quarter, down from $81 million in the September quarter. Claim hot-spots remain loans advanced to borrowers in Queensland and also to small business owners and the

5

Europe is not done for Australian banks

One of the indicators I watch closely is the CDS prices for major banks. This is the cost to insure a bond issued by a bank and is a guide therefore to the robustness or otherwise of underlying credit markets. Here is the long term chart for CBA, JPM and ING. I have chosen these three

12

Moody’s downgrades LMIs

From Moody’s: Sydney, February 04, 2013 — Moody’s Investors Service has today announced the conclusion of its review of the Australian lenders’ mortgage insurance (LMI) sector, and downgraded the ratings of three LMI companies. The actions are: – Genworth Financial Mortgage Insurance Pty Limited’s (Genworth Australia) insurance financial strength rating (IFSR) was downgraded to A3 from A1; – Genworth Financial