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.

18

Corrupt APRA must be shut

Check out its response to the Hayne Royal Commission yesterday: 1. This submission provides APRA’s views on issues and questions posed by the Interim Report that are relevant to APRA’s mandate. 2. In summary, there are three overarching questions posed by the Commission with respect to the regulators:  First, have the regulators’ responses to

6

Corrupt RBA declares mission accomplished on dodgy bank capital

The Reserve Bank of Australia’s (RBA) assistant governor, Michele Bullock, has praised the success of measures aimed at increasing the capital ratios of Australian banks. Bullock notes that the four major banks are close to achieving the Australian Prudential Regulation Authority’s (APRA) “unquestionably strong” capital benchmark, claiming the banks’ capital ratios have increased from 8%

4

Pre-nationalisation Genworth struggles pointlessly on

Via Martin North: Lenders Mortgage Insurer Genworth reported their 3Q18 earnings today with a statutory net profit after tax (NPAT) of $19.6 million and underlying NPAT of $20.4 million for the third quarter ended 30 September 2018 (3Q18). It is an important bellwether for the mortgage industry, and confirms recent softening. Whilst they have a strong capital

2

A seriously soggy ANZ

We’ll see this morning whether the bank short squeeze has any legs because the ANZ result is seriously soggy: EPS down. ROE down. Net interest margin down 12bps to 1.87. Costs up despite big head count reductions. Fantastically low credit impairments that are going to climb. A very uninspiring strategy of increasing exposure to the

8

Time for a bank short squeeze?

It’s hard to miss the hopeful action in Aussie bank stocks over the past few days. Despite major US falls the local banks have gone up, including this morning: ANZ, WBC and NAB all report market updates this week. Bloomie has more: Morgan Stanley (Oct. 10): Looking for guidance on margins, expense growth with focus

37

Gotti: Credit crunch worsening

Via Gotti: It’s a credit squeeze without any Australian precedent. And since the Wentworth by-election, the squeeze’s effects are being multiplied by the fear of ALP policies that were conceived before the squeeze had taken hold. At this stage, the squeeze is restricted to dwelling prices and developers but it’s about to spread to retail

10

Time to smash corrupt RBA, APRA, Treasury banking nexus

The evidence is in. Australian’s no longer trust their banking system, via the AFR: Only one in five Australians believes banks act ethically and only one in four thinks banks take responsibility for mistakes and keep their promises to customers, according to the damning findings in a new national survey. The survey underlines that the

4

Labor must reform corrupt regulators root and branch

If it didn’t matter, the contortions that Australia’s corrupt financial regulators are going through would be hilarious. We already have the RBA and Treasury working hard behind the scenes to restore criminal banking. ASIC seems to be trying to bring some kind of accountability but has no resources with which to do it and, let’s

61

Game of mates recidivist, AMP, crashes

Via the ABC: Embattled financial services firm AMP has seen its share-price smashed by more than 10 per cent after announcing it would offload its life insurance and wealth protection businesses as part of an overhaul, in the wake of damning revelations at the banking royal commission. The sentiment was not helped by a weak

9

S&P: Mortgage arrears still trending higher

Via S&P: Australian prime home loan arrears fell in August, according to a recently published report from S&P Global Ratings. The Standard & Poor’s Performance Index (SPIN) for Australian prime mortgages was 1.36% in August, down from 1.38% in July. The decline was consistent with our expectations; arrears have typically decreased month on month in

81

Corrupt regulators fight to restore criminal mortgages

The corrupt Treasury is hard at it, openly trying to restore criminal banking: Treasury secretary Philip Gaetjens has warned that a key risk to Australia’s strong economy is banks cutting their lending too much in response to the Royal Commission into financial services and tougher credit rules imposed by the prudential regulator. Amid complaints from

13

Mutuals to charge into credit hole

Via Banking Day: COBA chief executive Mike Lawrence believes large credit unions and mutual banks are poised for a new era of accelerated growth under proposed capital reforms announced by the Morrison government. Assistant Treasurer Zed Seselja yesterday called for public comment on planned changes to the Corporations Act that would remove capital restrictions constraining

1

Credit Suisse: Don’t buy banks

Via the always excellent Damien Boey at Credit Suisse:: In Tom Clancy’s 1984 best-selling novel “The Hunt for Red October”, a Russian Naval captain attempts to defect to the US by commandeering a state-of-the-art nuclear submarine “Red October” into US waters. The twist is that for a long time while the submarine is sub-merged, neither

4

Australian bank risk management “decade” behind world

So says ANZ Banking Group’s former chief risk officer Mark Lawrence: …most local banks are nearly a decade behind international peers transforming risk capabilities and fixing cultures, because until the Hayne royal commission there had not been a “burning platform” to stir reform like the 2008 financial crisis did overseas. Violations exposed by the royal

12

ASIC declares war on corrupt RBA and Treasury

And good on it, at Domainfax: Australian Securities and Investments Commission boss James Shipton has called for a radical increase in the regulator’s funding and slammed delays to legislation that will dramatically increase penalties against business crooks. Appearing at a parliamentary hearing in Canberra, Mr Shipton made his strongest speech since being appointed to the

9

Macquarie: Here comes jingle mail

Macquarie is today arguing that a 15-20% fall in house prices would plunge 310,000 home owners into negative equity and would cost the banks roughly $6bn in legal costs and remediation owing to breaches in responsible lending laws. That is, jingle mail: For legal actions to eventuate, a customer would need to have suffered a financial loss

3

Ken Henry’s NAB deepens the APRA swamp

It’s both riveting and horrible watching the major bank’s abort the next round of regulatory reform before it is even born, from The Australian: The word on the street is that Jacinta Ellis, a 12-year APRA veteran and a senior manager in the legal group, has defected to National Australia Bank, taking up a regulatory affairs

7

Fitch: Trade wars and regulation threaten Australia’s house prices

No shit, Sherlock: Housing Risks Re-Emerge Wilting house prices have prompted 50% of Australian fixed-income investors to nominate a domestic housing market downturn as the top risk to Australian credit markets over the next 12 months. While regulations and tighter lending standards have played their part, external threats posed by trade wars also loom and