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 the AFR: Economist Richard Holden from the University of NSW said it was a “good idea” for the government to press the RBA to thoroughly explain why it had undershot its 2-3 per cent inflation target because the bank had been “too slow” to cut interest rates in June and July. “If you had
It’s amazing that only six months after the Hayne Royal Commission exposed prolific criminality in mortgage standards that chief mortgage broker rentier, Aussie John Symond, has “urged the government to intervene to ease the pressure on banks over how stringently they must check customers’ living expenses”: [Symond is] pushing for regulators to take a more
The unsackable chairman of Australia’s single most important regulator has done it again. APRA released its monthly credit data late Friday and the results are very much sackworthy. To wit, it’s not that growth is suddenly off the hook. Rather, it is that the key data set for understanding the entire previous boom and bust
The Australian Securities & Investments Commission (ASIC) has reported that one in 10 consumers who take out a home loan via a mortgage broker are finding it hard to meet their repayments within 12 months. ASIC’s research also found that although consumers generally expect a mortgage broker to secure the most suitable home loan for
It’s horrible to watch as APRA’s head zombie regulator, Wayne Byers, shuffles along after a revving house price Ferrari. Check out this brain eating garbage yesterday from the man that should have been unceremoniously sacked after the Hayne Royal Commission exposed total APRA failure in the mortgage and wider banking market: The Australian Prudential Regulation
Good work from Jason Murphy at News today: The Reserve Bank has delivered a shocking warning on the consequences of interest rate cuts, even as it is slashing them to record lows. “We can be confident that lower interest rates will push up asset prices, and I think that later on we will have problems because of
NBN Co’s founding CEO, Mike Quigley, claims the national broadbank network’s (NBN) viability has become diminished as a result of the changes implemented by the Coalition when it came to power in 2013. Quigley, who left NBN Co not long after the Coalition was elected, contends it has a fundamental problem in that it is
Hot on the heels of losing its case against Westpac, the Australian Securities & Investments Commission (ASIC) has commenced legal action against NAB over alleged breaches of credit laws. Meanwhile, an accountant is seeking an explanation from NAB as to why it approved a $260,000 loan to her late partner despite the fact that he
UBS’ Jonathon Mott is freaking out a little declaring that RBA’s cure of rate cuts may be worse the housing correction “disease”: With interest rates now ultra-low, the ability of the banks to generate a lending spread and return on equity is very challenged. It is possible that RBA rate cuts could lead to a
Via InvestorDaily. UBS reported that it was cautious on the Australian big four banks as the low rates environment made it harder for the banks to generate a lending spread and challenged the return on equity. “If the housing market does not bounce back quickly, this could put material pressure on the banks’ earnings prospects over
Hoocoodanode! At Domain: One of Australia’s top bankers has warned against using unconventional monetary policy in an attempt to boost the domestic economy, saying it could undermine international investor confidence and have a precipitous impact on bank profit margins. The chief executive of Westpac’s institutional bank, Lyn Cobley, also said she did not think even
You honestly would not read about it. Following the RBNZ marvelous and necessary move to lift bank capital ratios to something approximating safe, APRA has declared war upon it: The Australian Prudential Regulation Authority (APRA) has released a strengthened prudential standard aimed at mitigating contagion risk within banking groups. The updated Prudential Standard APS 222
Via Patrick Commins at the AFR: …there are plenty of reasons to fear another leg higher in the property market. For one, many younger Australians already despair at the thought of ever owning a home, just as many if not most parents are worried their children won’t ever enjoy the stability of home ownership. Social
Via Martin North: Last week the Judge delivered his verdict in the ASIC-Westpac HEM case, essentially because of the ~260,000 loans examined in the case less than 5,000 would have potentially had their loans tweaked lower if the HEM was not used, whereas the bulk of the loans would have been bigger if HEM was
Yesterday we saw Westpac’s credit quality on the slide: Banking Day has more: Westpac is now starting to count the cost of its aggressive pitch for mortgage volumes at the peak of the housing market in 2016. According to the bank’s latest trading update published on Monday, credit quality across most of the group’s lending
Via the ABC: Treasurer Josh Frydenberg has revealed an “implementation road map” around the 54 recommendations from the financial services royal commission that called for Government action. The final report from commissioner Kenneth Hayne made 76 recommendations, 54 of which were directed at the Government, which has been accused of dragging its feet in response to the
From its quarterly update this morning: Still low but on the march upwards. It should keep getting worse with the economy. It’s the same story as other banks, entering zombie status as rising provisions meets low credit growth.
Via the AFR over the weekend: The Australian Prudential Regulation Authority is looking for a new head of policy and advice, following the resignation this week of Pat Brennan, who had responsibility for developing the regulator’s policies on banks, insurers and super funds. Mr Brennan’s surprise resignation after more than eight years at APRA creates
Via Martin North: ANZ today provided an update on credit quality, capital and Australian housing mortgage flows as part of the scheduled release of its Pillar 3 disclosure statement for quarter ending 30 June 2019 and associated chart pack. Given the strategy was to shed a portfolio of businesses and focus on the Australian retail market, we
There is one reason to think so today, via AFR: Westpac Group is set to follow up its landmark victory against ASIC on responsible lending with sweeping changes to home lending policies that include more rigorous assessment, deep diving into household spending, and new debt-to-income analysis of higher-risk loans. The bank is also planning to
Via S&P: Australian prime home-loan arrears remained steady in June, with the Standard & Poor’s Performance Index (SPIN) for Australian prime mortgages slipping 1 basis point to 1.51% from a month earlier. That’s according to S&P Global Ratings’ “RMBS Arrears Statistics: Australia,” published today. Arrears typically decline in June and throughout the third quarter. Mortgage
More from Martin North: Martin has been behind the curve on the rebounding market so is probably looking for an excuse to catch up. It’s still not clear to me that the ASIC judgement will end private class actions. Nor that ASIC will be forced to dump any of its HEM reform. That said, you’d
Via Martin North: The key question now is will the banks revert to their previous practices of doing little to validate household spending patterns as part of the mortgage assessment processes. Some are already saying “buy now” with renewed vigour. The Royal Commission revealed last year that some lenders ignored household expense data favouring the
Via the ABC: The Federal Court has dismissed ASIC’s responsible lending case against Westpac and ordered the regulator to pay the bank’s costs. ASIC had alleged that Westpac breached responsible lending laws on up to 262,000 home loan approvals made using an automated process that relied on the Household Expenditure Measure benchmark, rather than using
It’s all so predictable. Just months out from the prolific criminality exposed by the Hayne Royal Commission, the rentiers are back. Via the AFR: The founder of Aussie Home Loans, John Symond, says the housing market has turned a corner but both he and ANZ Banking chief Shayne Elliott believe that ‘over-regulation’ could threaten its
Earlier this month, the Federal Chamber of Automotive Industries reported that annual new car sale had hit the lowest level since November 2012: Today, The AFR blames part of this decline on tightening automotive credit: In a post-royal commission world, where the banks are struggling to come to grips with what “responsible” lending really means,
Some brouhaha around this in Denmark: Jyske Realkredit is ready with a fixed-rate mortgage with a nominal interest rate of minus 0.5%. Yes, you read right. You can now get a fixed-rate mortgage with a maturity of up to 10 years, where the nominal interest rate is negative. However, you are not exactly going to make money
Recall from last month: Slater and Gordon has widened its class action case against National Australia Bank to include people who were sold personal loan insurance. The firm’s class action issued in 2018 on the back of the Banking Royal Commission argues thousands of NAB customers were sold worthless credit card insurance they would never
She’s probably Australia worst public policy sell out. And she’s earning her $600k plus, via Banking Day: The Australian Banking Association is preparing to push back against ASIC’s plan to make responsible lending guidelines more prescriptive, and will argue for the maintenance of the principles-based approach when the regulator holds public hearings on the issue
A speech from the Dead Man of APRA today: Good morning. I am very pleased to be part of this event, and to lend my support to the Banking & Finance Oath and to Finsia, both of whom are playing important and timely roles highlighting the importance of trust and professionalism for a successful financial
