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.

32

CBA readies 10k job cuts

Via The Australian: Commonwealth Bank boss Matt Comyn is believed to be working on a plan to cut more than 10,000 employees, about $2 billion of costs, at Australia’s biggest and most profitable bank. No wonder Comyn wants to keep the plan secret — at least until after the May 18 election. Margin Call has

1

BOQ canary croaks on banks

The AUD is a little soft this morning: The lunatic RBA has paralysed bonds for now: XJO is down moderately: Dalian is soft: And Big Iron: Big Gas is still enjoying its deluded political risk holiday: Big Gold is mixed: Big Banks are sick: Made that way by the croaking BOQ canary which has broken

7

Greg Medcraft’s “absolute rubbish”

Via the AFR: The former corporate regulator Greg Medcraft has broken his silence on the Hayne royal commission, warning that using the courts against the banks could backfire given justice moves so slowl. He also described the recommendation to kill broker commissions as “absolute rubbish” because it overlooked the crucial role competition plays curbing misconduct.

3

Mortgage arrears rise coast-to-coast

Via S&P: Australian prime home-loan arrears rose in January, according to a recently published report by S&P Global Ratings. The Standard & Poor’s Performance Index (SPIN) for Australian prime mortgages rose to 1.45% in January from 1.38% a month earlier. January is typically the peak of the arrears cycle, reflecting the after-effects of Christmas and

29

How far will specufestor mortgages fall?

Via the AFR today: As Credit Suisse analysts pointed out recently, investors are genuine net new buyers and invest for capital gains rather than net rental yield. The Labor policies are seen as negative for the investment housing market and sales will slow, leaving residential developers such as Mirvac and Stockland most exposed. On the upside,

7

Budget delays ASIC funding to protect banks

Via Banking Day: Aggrieved financial services consumers might have to wait several years before regulators are adequately resourced to mount court actions against misbehaving and negligent institutions. While community expectations are high that ASIC will launch a wave of civil and criminal actions against financial institutions over the next 12 months, the truth is that

0

Banks face fear of global investors

From Chanticleer trailing bank executives in Hong Kong: The message from the bank executives was clear: housing isn’t a disaster area, and we are certainly open for business. …macro-prudential measures introduced three or four years ago have flowed through the industry – and trimmed 10 per cent to 15 per cent off the maximum a

49

Chris Joye’s big short

Via Livewiremarkets: In assessing whether to get long or short residential mortgage-backed securities (RMBS), we undertake a great deal of quantitative analysis, including revaluing the homes that protect these bonds at regular intervals and developing globally unique RMBS default and prepayment indices. (Regular readers will know that we exited most of our RMBS in February

7

Judo Capital: Aussie bankers biased towards property

By Leith van Onselen Judo Capital founder Joseph Healy has told a banking and wealth summit that a generation of bankers lack sufficient knowledge of the lending requirements of the small business sector, as they favour lending to property buyers. From The AFR: The co-founder of challenger SME lender Judo Capital said bankers were addicted

15

ANZ’s Lord Ponzi battles ASIC

Via the AFR comes the chutzpah of the roving cavaliers of credit: ANZ Banking Group chief executive Shayne Elliott has rebuffed Australian Securities and Investments Commission chief prosecutor Dan Crennan’s ambitions to lock bankers in jail, arguing regulators should prioritise a “fully functioning financial system” to support the economy. Mr Elliott warned the corporate regulator’s

12

Chris Bowen goes raw prawn on mortgage broker commissions

Via The Advocate: In a clear stance on Labor’s trail position, Chris Bowen MP has said that the government’s response to the banking royal commission has “got it wrong”, particularly in regard to its “backflip” on removing trail from next year. Speaking at the AFR Banking & Wealth Summit this morning (26 March), Chris Bowen,

22

UBS: Westpac warning “alarming” for interest only reset

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

14

Deutsche: APRA fudging mortgage data?

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

14

UBS: Banks wealth exit “warm up” to house price “main event”

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.

31

Mad Macquarie kills Bank of Mum and Dad

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

175

APRA must immediately ban ANZ’s new ponzi-mortgages

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

8

S&P: Mortgage arrears to remain elevated

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