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.
Dearly, deary me. APRA is in the fight of its life yet its executive is already dead. At the AFR: Investors are threatening to vote against bonuses calculated under the prudential regulator’s new executive pay rules, putting them on a collision course with the boards of the major banks. Former National Australia Bank chairman Michael
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,
Via Banking Day: Messing around with home loan pricing and promotion in a manner loathed by regulators, Westpac has sweetened home loan incentives by almost doubling the rate discount offered to new home buyers that take out a packaged mortgage deal with the bank. In a move likely to trigger responses from the three other
Time to go, mate. Via the SMH: A rare public intervention from banking royal commissioner Kenneth Hayne could be aimed at ensuring his recommendations are not watered down by financial sector lobbying, former watchdog Allan Fels says. …In a move that adds to pressure on APRA, on Monday commissioner Hayne made his first public comments
Via Assistant Governor of Financial Market madness at the Lunatic RBA today: The Committed Liquidity Facility I’d like to thank Bloomberg for the opportunity to speak to you about the committed liquidity facility (CLF). The CLF has been in place now for almost five years. As we announced in June, after a careful review, the
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
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
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
That is, he can’t do jack to fix the bank when the system itself is busted, via Jonathon Mott at UBS: The right banker for a very challenging outlook in Australia In many ways the banking environment in the UK is 3-5 years ahead of Australia, with: ultra-low interest rates; intense mortgage competition; Open Banking;
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
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
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
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
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
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
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
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
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
The ANZ Bank has advised that its ‘floor rate’ for home loan customers will be reduced from 7.25% to 5.5% in response to the Australian Prudential Regulation Authority’s (APRA) recent reforms. ANZ will also increase its sensitivity margin to 2.5%. Rival banks are expected to quickly follow ANZ in reducing their floor rates, which are
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
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
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
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
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
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
Via ANZ: Today we have decided we will reduce variable interest rates for our home loan customers by 0.25pc pa. Importantly, we will apply this reduction across all our variable rate home loans. It took the pain last time so now it someone else’s go. CBA’s! In response to the Reserve Bank’s move to cut
Tipping point anybody? Normally Australia’s big banks would soar on rate cuts as volume growth and curve steepening lifted their profits outlook. Not today: Smash. And why we know, from Goldman year’s ago: …if the cash rate was to fall below 1.50%, every additional rate cut thereafter would shave about 5 bp off sector margins.
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.”
Why would they? The so called “political pressure” to do so is gone. ScoMo and Recessionberg are banking and property patsies. As well, with each new interest rate cut below 1.5% net interest margins get squeezed. Formerly from Goldman: …if the cash rate was to fall below 1.50%, every additional rate cut thereafter would shave
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
