Via UBS’ excellent Jonathon Mott: WBC is finding it very difficult to estimate the potential remediation requirements for customers served via aligned planners, especially as many planners no longer work under BTFG Licences and in many cases have left the industry. WBC indicated that it generated fees of $966m from this channel in the decade
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.
It’s been running for a few years: the widening spread between the cash rate and bank funding costs expressed through BBSW. This has led to impaired monetary transmission for the RBA as banks are forced to wither hike rates out of cycle, or not cut when it does. Recent weeks have seen the spread compress
Push it, mate. Push it! No pain, no gain! No more from NAB: In a statement issued yesterday the bank said it will end its ‘Introducer’ payments program, effective October 1 this year. “This means NAB will no longer make referral payments to introducers,“ the bank said. These fees are paid to groups in particular
By Leith van Onselen Analysts at Deutsche bank believe they have found a major flaw in APRA’s mortgage data, which significantly understates average loan size. Basically, because APRA has failed to adjust for split-loans, the $276,000 average loan size figure has been understated by around 40%, according to Deutsche, thus giving regulators a false sense
Lol, the LNP is so corrupt it is difficult to know where to look. Via Banking Day: Which would you prefer? Bill Shorten’s town hall tour of Australia to wrap up the Hayne royal commission into banking? Or policy making of the kind dished up by Josh Frydenberg on Friday? The government has decided not
By Leith van Onselen Australia’s four major banks are able to access wholesale funding at cheaper rates because of an implied guarantee that the federal government will not let them fail because of their size. ME Bank CEO Jamie McPhee says governments should tax the bigger banks because they get cheaper funding as a result
Via the excellent Jonathon Mott at UBS: We have cut FY19E EPS by 3% given exit costs and larger losses from the Advice business, but we upgraded FY20E by 0.6% (exit from loss-making business). However, our forecasts are yet to incorporate further customer remediation charges (fee-for-no-service) for aligned advisers which are very difficult to estimate.
Via the AFR: Macquarie Bank is axing popular “Bank of Mum and Dad” financing and borrowing for self-managed super fund investment property as it continues to overhaul its residential property operations. The bank, which recently announced it was no longer underwriting new “home-branded” loans for several household-name lenders, stopped offering family loan guarantees on Monday
Today I am in shock, which isn’t easy these days. Via the AFR comes the ASIC chief referencing post Hayne Royal Commission bank reform efforts: “I am still not convinced that there’s enough wherewithal and ownership by leaders of these financial institutions to actually finish the job,” Mr Shipton told the Australian Competition and Consumer
Via S&P: Arrears on the mortgages underlying Australian residential mortgage-backed securities (RMBS) have increased year on year, while prepayment rates have slowed, according to S&P Global Ratings’ latest edition of “RMBS Performance Watch: Australia.” In particular, arrears that are in an advanced stage (more than 90 plus days) reached a record high of 0.75% in
Via the AFR: …For months, brokers have phoned the offices of federal politicians, fired off angry emails and held town-hall style meetings to berate MPs for an attack on their livelihoods after both sides promised to implement most of the commission’s recommendations on broker pay. At the same time, TV personality Bouris, a business ally
Desperation, thy name is Recessionberg, via AFR: The federal government has backflipped on a key recommendation of the banking royal commission and will no longer ban trail commissions for mortgage brokers from 2020, as it promised to do last month. Instead, it will hold a review into whether trail commissions should be kept from 2020 onwards.
By Leith van Onselen Shadow financial services minister Clare O’Neil will use a Committee for Sydney speech on 12 March to reveal that Labor will reject only one recommendation in the Hayne royal commission’s final report if it wins the upcoming federal election. Labor has joined the Coalition in opposing the proposal to shift the
Via The Australian comes UBS’s George Tharenou: “My framework here is that the regulatory tightening is accelerating, so the only effective policy lever available in the near term to stimulate the economy is the cash rate,” he says. “There’s a view that the royal commission was benign because it didn’t change law, but we never
Via UBS’ excellent Jonathon Mott today: The recent reporting season highlighted the revenue pressure the banks are under. The substantial mortgage repricing undertaken by the banks over the last six months has already been largely offset by: higher funding costs; front-book discounting; switching from Interest-Only to P&I; mix changes from Investors to Owner Occupiers and
Via Nathan Lynch of Reuters via Banking Day: The Australian corporate regulator is pushing ahead with a landmark case against some of Commonwealth Bank’s existing and former board members over the organisation’s anti-money laundering (AML) failures. The civil case is shaping up to be one of the first under the Australian Securities and Investments Commission’s
By Leith van Onselen Queensland-based Suncorp Group has advised that a $120 million residential mortgage bond may not be able to repay all investors. The bond’s distributions have been thrown into doubt because the proportion of borrowers in arrears had reached a ‘trigger’ point. The bond dates back to 2010, so borrowers have been meeting
By Leith van Onselen The noose is slowly fastening around Australia’s mortgage industry. The Hayne royal commission found that mortgage lenders had not adequately assessed borrowers’ capacity before extending credit, instead relying on the Household Expenditure Measure (HEM) – a relative poverty measure that estimates expenditure at the lower end of the income scale. This
Westpac’s excellent February 2019 Housing Pulse contains interesting information on mortgage arrears, which are rising across the four major markets: Mortgage arrears provide a timely indicator of urgent or distressed sales – the presence of which can precipitate significant price weakness. For most existing home owners there is a degree of optionality when it comes
By Leith van Onselen Labor proposes to establish a Financial Rights Fund if it wins the upcoming federal election, which will assist victims of misconduct in the financial services sector. This ‘fairness’ fund will be financed via a new levy on Australia’s largest financial institutions, and is slated to raise $160m annually over four years.
Via Banking Day: The plaintiff law firm said the class action was being run in the Federal Court on behalf of people who, after 1 January 2011, were given “unsuitable loans” by Westpac, in breach of its responsible lending obligations. …Principal lawyer and managing partner with Maurice Blackburn, Ben Slade, said: “This case will seek
Via Banking Day: APRA fronted the Senate Economics Legislation Committee – better known as the Senate estimates committee – yesterday and covered a grab-bag of topics, with the overarching theme that this year will be a much tougher brand of regulation. APRA and ASIC will need to be tougher, in order to justify a raft
The housing panic has set in for the incoming government, via the AFR: Labor will outbid the Coalition on banks today by promising a vastly more generous compensation scheme for victims of financial service wrongdoing, including payments of up to $2 million for individuals and small businesses. …It will announce the lender will pay an
By Leith van Onselen Westpac will face a class action in the federal court for issuing home loans that breached responsible lending rules. From SBS News: Westpac is facing a class action for allegedly giving loans to people who couldn’t afford to pay them back. The class action, in the Federal Court, is the first
Via the AFR today: Industry sources said one of Labor’s proposals was that the lender paid the broker a flat fee regardless of the size of the loan, rather than a fee that is a percentage of the loan. This change would discourage brokers talking people into borrowing more than they need to increase the
But records are made to be broken. Via S&P: Australian Prime Home Loan Delinquencies Rose In December; 90-Plus Days Arrears Hit Record High MELBOURNE (S&P Global Ratings) Feb. 20, 2019–Australian prime home-loan arrears rose in December, according to a recently published report by S&P Global Ratings. The Standard & Poor’s Performance Index (SPIN) for Australian
Via the AFR: The chief executives of the four big banks will be made to face Parliament twice a year to report on progress in implementing the banking royal commission reforms, as part of a boosted accountability regime Labor will introduce if it wins the election. As well, the banks, the regulators ASIC and APRA