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.

11

Yes, business credit is going to fall too

Via the AFR: This has prompted an urgent warning from the small business ombudsman, Kate Carnell, for the banking royal commission to recognise that loans secured by residential property must be assessed differently from consumer mortgages, to ensure capital continues to flow into SMEs to allow them to drive economic growth. …”Small business credit growth

5

Mortgage arrears rise coast to coast

And it is not seasonal, on the contrary, from S&P: Australian prime home loan arrears rose in October, according to a recently published report by S&P Global Ratings. The Standard & Poor’s Performance Index (SPIN) for Australian prime mortgages, increased to 1.35% in October from 1.33% in September. The trend was consistent in all states

18

Evil Anna eggs on criminal banking

It’s the bonfire of the vanities now, from Evil Anna at the ABA on APRA’s interest-only crumble: [it] will allow all banks to offer more choice for customers, leading to an increase in competition across the industry, particularly for smaller and regional bank. While banks will continue to lend prudently, today’s decision will mean all

18

End of the road for Ken Henry?

ANZ has had a first strike on its remuneration plan, via the AFR: ANZ Banking Group chairman David Gonski said the bank faces a first strike against its remuneration report when the shareholder poll is taken later today, with preliminary numbers showing 34 per cent of shareholders voting against it, after “a confronting year for

32

NAB management falls apart

What other conclusion can we possibly draw? Yesterday the CEO declared he would take a well-earned holiday: National Australia Bank chief executive Andrew Thorburn will take extended period of leave from the bank after a bruising year of scandals at the big four lender that ran as deep as his own office, that he described

1

Regulator panic crashes Aussie yield curve towards recession signal

Via Bloomie: Sydney’s plunging house prices are usurping a prolonged wage slump as the key worry for the central bank, with markets now showing more chance of an interest-rate cut than a hike in 2019. Prices in Australia’s biggest city have tumbled 10 percent and some economists are tipping a similar fall next year. While

5

RBNZ destroys bank profitability

Via Ian Rogers at Banking Day: A haircut for Australian bank profits – but the collapse of bank profitability in New Zealand. That’s the take of Andrew Lyons, Ashley Dalziell and Desmond Tsao in a commentary from Goldman Sachs Australia yesterday on the Reserve Bank of NZ’s capital proposals. Lyons and co estimated NZ banks’

81

APRA shits itself, lifts interest-only mortgage cap

Lol: The Australian Prudential Regulation Authority (APRA) has announced that it will remove its supervisory benchmark on interest-only residential mortgage lending by authorised deposit-taking institutions (ADIs). The benchmark was put in place as a temporary measure in March 2017, as part of a range of actions over recent years to reinforce sound lending practices. The

54

Lunatic RBA takes corruption directly to bank CEOs

Unbelievable, from The Australian: Reserve Bank governor Philip Lowe is understood to have met the big four bank chiefs in recent weeks to caution them against an overzealous tightening of credit supply in response to lending rules and the Hayne royal commission. A key message conveyed was that, while prudent lending was the aspiration, the

5

ASIC takes Westpac back to court on responsible lending

Via The Australian: The corporate regulator is squaring up for a responsible lending case against Westpac Bank in May, after an embarrassing setback in the Federal Court last month. The Australian understands the Australian Securities and Investments Commission and Westpac will now face a case management meeting on April 12 and then attend an eight

16

Banks continue to defuse interest only time bomb

APRA released it quarterly ADI property exposures yesterday and banks continue to defuse the interest-only time bomb. IO was only 16% of mortgage flows at $14.4bn: And the stock outstanding IO loans fell sharply again to 26% of the book or $434bn: This is down from a balance of $542bn when macroprudential 2.0 began. It’s

139

Lunatic RBA runs riot

The politico-housing swamp has entered a corruption blow-off. One doesn’t need to be Albert Einstein to see why. House price falls are steepening and the panic in official circles is mushrooming. This week saw two extraordinary events that illustrate the circling of the wagons among the ruling class. The first was the COAG meeting which

5

As credit tightens, Aussie banks binge on offshore bonds

By Leith van Onselen The Australian Bureau of Statistics (ABS) has released its National Financial Accounts for the September quarter, which revealed a 1.8% quarterly decline in Australian banks’ gross external liabilities (offshore borrowings), but a large 7.6% increase over the year. One Name Paper (-$24 billion) and Deposits (-$10 billion) drove the quarterly decline

27

ANZ rate rigging went right to the top

Via the ABC: ANZ chief executive Shayne Elliott and other senior managers have been implicated for the first time in the interest rate rigging scandal that rocked Australia’s financial system. The details are outlined in a tranche of court documents obtained by the ABC that were quietly filed by the corporate regulator shortly before a

3

Dodgy regulators beg banks to lift criminal mortgages

These guys really are just too much: Quarterly Statement by the Council of Financial Regulators As part of its commitment to transparency, the Council of Financial Regulators (the Council) has decided to publish a statement following each of its regular quarterly meetings. This is the first such statement. The statement will outline the main issues

12

A healthy dose of fear is precsiely what is needed, Gotti

More Gotti rent seeking today: Fear is suddenly driving the actions of a large rump of Australians. It is seen most clearly in the housing and apartment markets of Sydney and Melbourne. To a lesser degree, that housing fear infects most other mainland capitals. …For years people thought lower dwelling prices would attract first home

10

ACCC, APRA and ASIC war over bank gouging

Via Banking Day: The Australian Competition and Consumer Commission has called out the big banks for gouging an extra $1.1 billion a year from thousands of interest-only borrowers, but has baulked at recommending action to fix the problem. The four major banks controversially repriced their interest-only back books by an average of 32 basis points

37

When will falling house prices choke the banks?

To understand this question we first need some bank capital 101 from MB’s banking insider, Deep T: There are two ways an Australian Deposit taking Institution (“ADI”) calculates capital to be allocated against a residential mortgage. Either in accordance with APRA’s APS 112 Attachment C or under Advanced Basel II methodology. Let’s address the rather simple APRA