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 CBA: Commonwealth Bank notes recent media reports concerning compliance and transaction monitoring in offshore jurisdictions by the Institutional Banking & Markets division. The document referred to in those media reports was a working document, proposing technology enhancements as part of our ongoing Program of Action, including the automation of tasks currently undertaken manually. A
Via The Australian: Billions of dollars in Commonwealth Bank transactions in the US, Europe and Asia have not been properly monitored, the bank’s internal review has found, potentially exposing the institution to investigation by global regulators. The confidential review of the bank’s compliance with Australian and global anti-money laundering and counter-terrorism laws revealed large-scale failures
The damned are hard at work: It sounds like Anna Bligh is putting her stamp on the Australian Bankers’ Association’s poky Secretariat on Sydney’s Pitt Street. The former Queensland Premier (and now Medibank Private director) is hedging her own ALP roots with her latest hire: former Coalition staffer Nathalie Samia. Samia begins next week as the ABA’s executive
The ASX is flat flat today, sitting right at the bottom of a scary descending triagle: Dalian is down again: Big Iron is mixed. BHP approaching break out: Big Gas and the pensioner gouge roar on: Big Gold too: The Big Sleaze can’t stop falling. Perhaps Narev has to go?
Via UBS: Interest Only loans have fallen to 30.5% of Bank approvals APRA’s cap on Interest Only (IO) lending flow is starting to take effect. During the June quarter the Banks’ reported 30.5% of mortgage approvals were for IO loans – down from 37% over the last 12 months. This is the lowest percentage of
Via The Australian: Fears are growing that offshore regulators will be next to take a swipe at the nation’s largest bank, as ramifications for Commonwealth Bank’s alleged breaches of anti-money laundering laws start to mount. …The bank is also under investigation by the Hong Kong Monetary Authority, while the Monetary Authority of Singapore has said
Some nice points from the always excellent Brian Johnston at CLSA: CBA likely faces higher operating costs, higher operational risk capital and reduced pricing power from AUSTRAC AML allegations, according to CLSA’s Brian Johnson. And while quantitative signals favour a switch to CBA from WBC, it’s too early to buy given further retail selling of DRP
Break! XJO has just seen its symmetrical triangle break down the wrong way. It’s taken out the 200DMA to boot: This clearly opens the way for lower. Thanks DPRK! This should still lead absolutely nowhere in terms of North Asian conflict. Japan and US have requested a UN Security Council meeting. But we’ve yet to
APRA is out with its quarterly ADI housing exposures and there are some encouraging signs for macrprudential 2.0. Total loans were still up 7% year on year and interest-only 6%. However, more recently, the trends have shifted sharply. Leading flows for the June quarter were only up 0.4% year on year. And interest only flows
Via Credit Suisse: ■ From market darling to chump change: Precedents of banks experiencing governance crises suggest that a peer group NTA multiple de-rating of 10- 20% is plausible (implying a CBA share price of A$74–$81), and that the issue can manifest itself in the share price for an extended period (two years for NAB);
Via Deutsche: Bad debt charges were lower than expected Three of the majors reported bad debt expenses, and were all lower than our expectations. On a BDD/GLA basis, the June quarter charges were 20-30% lower than the run rate implied by our 2H17 forecasts. While quarterly numbers can be volatile, the continuation of benign conditions
Chanticleer suggests we look to what APRA did to NAB following its forex travails in 2003: APRA conducted a review into that incident and delivered its findings to the NAB board which then released it publicly. The report found that NAB’s management was complacent and arrogant and this impacted negatively upon its management of regulatory
Macroprudential 2.0 is still in the swing as the nation’s largest zero-interest bank struggles get under the 30% cap, via AFR: Westpac Banking Group will today introduce a new range of policies intended to tighten lending by increasing scrutiny of borrowers’ income, the second policy change in a week after revealing its exposure to higher-risk
Jonathon Tepper has a new name for the CBA: And investors are voting with their wallets, hitting new lows: The chart still suggests no support right down to $70 and with the politics getting worse who knows? The under-performance is worsening but the whole sector appears increasingly tarnished: Meanwhile today, Dalian has managed to ease
From Evil Anna today: The Australian Bankers’ Association has today released new research that measures and tracks community trust and confidence in banks. The research conducted by international firm Edelman Intelligence will be used by the industry to assess the impact of the wide ranging reform agenda currently underway across the sector. “The research shows
From the Wet Lettuce: The Australian Prudential Regulation Authority (APRA) today announced its intention to establish an independent prudential inquiry into the Commonwealth Bank of Australia (CBA) focusing on governance, culture and accountability frameworks and practices within the group. The prudential inquiry will be conducted by an independent panel, to be appointed by APRA. Subject
From S&P: The number of delinquent housing loans underlying Australian prime residential mortgage-backed securities (RMBS) fell to 1.15% in June from 1.21% in May, according to a recent report by S&P Global Ratings. While arrears typically fall month on month during this period of the annual cycle, we also attribute some of the decline to
After breaking support yesterday, Terror Bank is sinking again today: How far is it going to sink? The chart suggests no support down to the $70-72. Here are the relative valuations of the big four: The CBA premium has already retraced to WBC. Will it get to NAB and ANZ? The premium began post-GFC against its
Dalian is warming up again today: XJO is up too as its symmetrical triangle narrows: With Big Iron powering, it would seem that the odds favour an upside break from that pattern: Big Gas also appears constructive as it ravages east coast pensioners: And Big Gold looks positive too as it climbs: But holding it
By Nathan Lynch of Thomson Reuters. By early 2015, Commonwealth Bank’s investment in the rollout of hundreds of intelligent deposit machines across Australia was paying off handsomely. The country’s largest financial institution was reporting bumper profits. The gradual automation of its teller services, via this new kit, along with the push towards 24/7 banking, was
No Wall St rally for you! XJO is kidding: As Dalian crashes: Big Iron is off: Big Gas looks strong. If you don’t mind stealing from pensioners then the charts look constructive: Big Gold is firm too but I’m definitely a seller on the notion that Trump has bottomed: Big Bubble is getting hosed as
From Domainfax: The Commonwealth Bank faces a potential investor class action over its disclosure of more than 53,000 alleged breaches of anti-money laundering laws, following a sharp fall in its share price when the scandal emerged earlier this month. Plaintiff law firm Maurice Blackburn and litigation funder IMF Bentham on Tuesday said it would investigate a potential class action on behalf of CBA shareholders, citing the
Via Credit Suisse comes confirmation of what we’re seeing RMBS for household credit stress: ■ Mortgage & card past-due ratios and mortgage impaireds ratios rose in the latest quarter, with loss rates stable in mortgages but rising in cards. Whilst acknowledging seasonality, a slowing Western Australian economy, and residual impacts of Cyclone Debbie, mortgage past-due
Banks are bridling today via their good friend the AFR: The major banks have fired several torpedoes towards the government’s regime to lift standards in the banking sector, warning it will blur regulatory responsibilities, confuse legal obligations and lacks procedural fairness by preventing court appeals. National Australia Bank’s submission on the Banking Executive Accountability Regime is the
Dalian is up again today but looking a little tired as parcel limits kick in: Big Iron ore still roaring: Big Gas is outdoing oil: Big Gold looks strong: Terror Bank continues to under-perform: And Big Liar to ignore reality, though MEA has faded (or that might be an uber-bullish “cup and handle” formation: Finally,
