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.

19

Recessionberg applies CPR to dead man Byers

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,

17

Is corrupt APRA preparing the next round of macroprudential?

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

2

Is the UK pleased to see the back of new NAB CEO?

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

17

Kenneth Hayne signs Wayne Byers death warrant

Wayne Byers must resign, at the AFR today: Kenneth Hayne, who spearheaded the royal commission into the financial services sector, has come out and publicly backed all the recommendations in the APRA capability review and says it is consistent with his own final report. …Hayne’s endorsement of the capability review into APRA, which was released

1

The law comes calling for a dodgy CBA

Via Banking Day: Two closely related class actions will proceed against Commonwealth Bank over its alleged failure to comply with Anti-Money Laundering laws. Justice David Yates of the Federal Court of Australia in the last week has made “Cooperative Case Management” orders and largely dismissed concerns raised by the bank. The applicant in the Zonia

21

Centre Alliance: Wayne Byers must resign

Contemporary Australian governance is all about diffused responsibility. Rule one in this new public disorder is to pretend to reform by instructing the demonstrably failed to do it right. It’s virtue signalling writ large that changes nothing while protecting your arse. To wit. Josh Recessionberg, who stupidly reappointed APRA chairman Wayne Byers before he got

7

Fitch dumps WBC and ANZ onto negative watch

Via Fitch for ANZ: VIABILITY RATING, IDRS AND SENIOR UNSECURED DEBT The revision of the rating Outlook to Negative reflects the risk that ANZ’s focus on remediating operational and compliance risk issues and culture may result in the diversion of resources from ongoing operations, which could ultimately lead to a weakening of ANZ’s earnings relative

2

Coalition drags chain on Hayne recommendations

The Coalition began implementing some of the Hayne banking royal commission’s recommendations prior to the federal election. However, the government has warned that the bulk of the recommendations are unlikely to be implemented before the end of 2019. Treasury has barely begun the consultation process and drafting of legislative reforms. Shadow treasurer Jim Chalmers says

20

Wayne Byers is no longer tenable

Chanticleer is expressing public doubts as besieged APRA chairman Wayne Byers couldn’t even front cameras yesterday, preferring a teleconference from his fortress of solitude: This tight control of the dissemination of information and the strategic decision to avoid the nightly news sits oddly with the firm advice in the capability review for APRA to engage

5

Mortgage arrears stable

Via S&P: Australian prime home-loan arrears stabilized in May after rising in preceding months, according to a recently published report by S&P Global Ratings. The Standard & Poor’s Performance Index (SPIN) for Australian prime mortgages was largely unchanged, declining to 1.52% in May from 1.53% a month earlier. Arrears in May were up 13 basis

18

APRA staff: Management is captured

At the AFR come stunning leaks from APRA staff via its internal review: “When institutions are consistently able to get a different result by appealing to GM levels and above, line supervisors become demoralised and institutions become emboldened to push the limits,” one employee said. …One employee speaking under the protection of anonymity said the

6

Wayne Byers must resign immediately

Obviously enough. Via the ABC: An independent review is urging the overhaul of the Australian Prudential Regulation Authority (APRA), slamming it for a poor culture and variable leadership. In a proposed shake-up of the often secretive regulator, a three member panel chaired by former ACCC chairman Graeme Samuel said change was needed. “APRA appears to

4

RBNZ is a litmus test of Australian monetary failure

As we know, the superb RBNZ has fully integrated monetary and macroprudential policy tools, a creative leadership and national interest values. This enables 300 staff to conduct all of the functions that Australia’s combined monetary regulators fail to do with 1,400. It uses big and dumb rules to govern financial stability, the cash rate when

2

APRA hit big banks with extra capital charges

by Chris Becker APRA is ordering the remainder of Megabank to hold a little more capital in reserve in case of bad things. From Martin North: APRA has written to ANZ, National Australia Bank (NAB) and Westpac advising of an increase in their minimum capital requirements of $500 million each. The capital add-ons will apply

6

S&P: Bank outlook stable on “highly supportive” government

From S&P Global Ratings: Major Australian Bank Outlooks Revised To Stable, Macquarie Bank To Positive, After Policy Clarity On Government Support Based on APRA’s announcement today that it is proceeding with its plan to strengthen Australian banks’ loss absorbing capacity–as well as other relevant factors–we believe that the Australian government remains highly supportive of the

6

Captured APRA waters down bank capital framework

The Australian Prudential Regulatory Authority (APRA) has caved-in yet again, delaying proposed bank capital reforms: The big four banks will have longer than expected to raise extra capital to absorb potential losses after the prudential regulator amended its proposed framework for minimising the fallout from failed institutions. The Australian Prudential Regulation Authority on Tuesday said

50

APRA’s mortgage buffer loosening won’t deliver new house price boom

The ABC’s David Chau has penned a good summary of the likely impacts from APRA’s reduction in its interest rate buffer to 2.5%, which was announced on Friday: Effective immediately, banks no longer need to apply a “stress test” to see whether their customers can afford, at least, a 7 per cent interest rate on

42

Captured APRA removes mortgage buffers

As expected: The Australian Prudential Regulation Authority (APRA) has announced that it will proceed with proposed changes to its guidance on the serviceability assessments that authorised deposit-taking institutions (ADIs) perform on residential mortgage applications. In a letter to ADIs issued today, APRA confirmed its updated guidance on residential mortgage lending will no longer expect them

16

Evil Anna opposes responsible lending

And I thought “Evil” Anna Bligh had disappeared. But no, via Banking Day: The banking industry is opposed to key parts of ASIC’s proposed overhaul of its guidance on responsible lending conduct, criticising it as a move away from principles-based regulation to a more prescriptive approach, and claiming it will disadvantage small financial institutions and

26

Banks slam ASIC for suggesting they do their job

ASIC wants banks to stop or augment their use of the Household Expenditure Measure (HEM) but the banks have expressed their disdain in new submissions to the regulator released today: WBC: “Accurately verifying basic and discretionary living expenses using transactional account data is currently not feasible and in Westpac’s experience, would be of limited value.”

3

How to comfort a banking psycho

Recently we saw this, via the AFR: The psychologist inserted by the corporate regulator into boardroom discussions of more than 20 blue-chip companies including Qantas, Woolworths and AMP warns that Australia’s financial sector culture is broken. Elizabeth Arzadon, the regulator’s psychologist of choice, also warns that resistance by boards to public criticism is a mark of