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.


Banks shower propaganda as WA follows SA on bank tax

Banks are bridling today via their good friend the AFR: The major banks have fired several torpedoes towards the government’s regime to lift standards in the banking sector, warning it will blur regulatory responsibilities, confuse legal obligations and lacks procedural fairness by preventing court appeals. National Australia Bank’s submission on the Banking Executive Accountability Regime is the


Evil Anna takes SA bank to High Court (no comment on Terror Bank)

This woman has to resign to save her soul: Sydney, 22 August 2017: Australia’s major banks have resolved to mount a challenge to the SA bank tax if it is legislated, the Australian Bankers’ Association announced today. “The South Australian Government will face a High Court challenge if it introduces its proposed bank tax,” ABA


Interest-only switching going gangbusters

Via Morgan Stanley: While Australian banks’ margin recovery is in the sweet spot in late 2017, today’s new data from WBC shows IOL switching could be playing out earlier than the market expects. This presents downside risk to margins in 2018. Interest only switching is rising: WBC has more IOL(~50% of Australian mortgages) than other


Instos dump Terror Bank

And why wouldn’t they, sheesh, from Banking Day: Institutional shareholders are reviewing their equity exposures to Commonwealth Bank amid deepening concern that the valuation premium on the company’s stock will continue to erode. Many of Australia’s largest super funds and listed equity trusts – including Australian Foundation Investment Company, Argo Investments and Australian Super –


AUSTRAC indictes TerrorBank in Parliament

It think we can call this brand damage, via The Australian: Six transactions by five customers made through Commonwealth Bank’s intelligent deposit ATMs may have financed terrorism, Austrac has alleged. …Mr Clark said prosecution was “not something we take lightly”. …Asked whether the allegations listed in the 600-page statement of claim against CBA werer exhaustive,


ConBank lumped with Russian laundry banks

By Nathan Lynch, Asia-Pacific bureau chief, financial crime and risk, Thomson Reuters Commonwealth Bank of Australia faces enquiries from a range of different regulatory agencies in various jurisdictions over its alleged anti-money laundering failures, sources said. The bank is already preparing a response to the Australian Transaction Reports and Analysis Centre’s litigation alleging more than


ConBank becomes TerrorBank

Oh dear, via Chanticleer: One of the ugly sleeper issues buried in the 580-page statement of claim issued by financial intelligence agency AUSTRAC against the Commonwealth Bank of Australia is the accusation the bank failed to report its suspicions that a customer had links to terrorism financing. Under the law any suspicion of terrorism financing must be


The fallout from ConBank

Via Morgan Stanley: The pending retirement of CEO Narev in 2018 suggests more change is likely at CBA. At the same time, we believe the end of the mortgage bull market and increased political and regulatory scrutiny will weigh on CBA’s growth, returns and trading multiples. Response to the AUSTRAC announcement: The Chairman has responded


As regulators circled, CommBank board was forced to take action

By Nathan Lynch, Asia-Pacific bureau chief, financial crime and risk, Thomson Reuters The Commonwealth Bank money laundering scandal claimed its first scalp yesterday morning, with the imminent departure of chief executive Ian Narev. For the embattled CBA chief, the A$8.9 billion smart laundromat affair was the last straw. This article explores the untold story of


Narev gets the tap on the shoulder

Via Domainfax: Commonwealth Bank chief executive Ian Narev will leave the bank by the end of this financial year, the bank’s chairman Catherine Livingstone says. As the country’s biggest lender is engulfed by allegations it breached anti-money laundering rules, Ms Livingstone said Mr Narev would retire by June 2018, subject to when it was able to find a replacement. The announcement comes


ASIC to investigate CBA money laundering

By Leith van Onselen ASIC has announced that it too will investigate CBA for failing to comply with continuous disclosure rules relating to its money laundering scandal. From The ABC: ASIC chairman Greg Medcraft said the corporate regulator would investigate whether the CBA’s board complied with continuous disclosure laws when it decided not to alert


SA Premier slams bank levy white anting

By Leith van Onselen South Australian Premier Jay Weatherill yesterday accused the local media of undermining democracy by running advertisements that oppose his government’s controversial bank levy. From The Australian: South Australian Premier Jay Weatherill has stepped up an extraordinary attack on banks, today accusing the media of co-operating with financial institutions to achieve a


Megabank and APRA: Unquestionably average

Australia you’ve been conned, hoodwinked by APRA to ensure that the too big to fail taxpayer guarantee of Mega Bank (CBA, NAB, ANZ and WBC) continues unabated. Another example of the game of mates, where APRA gains by pointing to a job well done on system stability, even while the risk rests squarely on the


CBA cash profit nearly tops $10 billion

by Chris Becker Money laundering scandal? What money laundering scandal? The biggest division of Megabank, the former government owned division, just posted its eighth record high profit, slightly beating expectations. More from Bloomberg: Cash profit, which excludes one-time items, rose 4.6 percent to A$9.88 billion ($7.8 billion) in the 12 months ended June 30 from


How deep does bank money laundering go?

By Leith van Onselen The AFR reports today that AUSTRAC believes the CBA is not the only bank that has been targeted by crime groups. The agency’s statement of claim against CBA notes that other Australian banks have been used by money-laundering syndicates. They are believed to include Westpac and the ANZ, although AUSTRAC does


CBA bonus cut a slap on the wrists

By Leith van Onselen The fallout from the CBA’s money laundering scandal continues, with the CBA board agreeing to slash short-term bonuses for CEO Ian Narev and 11 of his executives, and the board also cutting director fees by 20%. From The ABC: Chief executive Ian Narev and his fellow senior executives will lose all


CBA money laundering bolsters case for Royal Commission

Cross-posted from The Conversation: The Commonwealth Bank is facing another scandal as the Australian Transactions Reports and Analysis Centre (AUSTRAC) launches civil proceedings accusing the bank of being complicit in money laundering. This exposes a deeply worrying prospect, that the Australian public are vulnerable to crime and terrorism directly funded through the Australian banking system.


CBA shares off 3% as money laundering scandal bites

by Chris Becker It was never going to be a stellar day on the stock market, as traders preposition for the most important economic print on the calendar, tonight’s US unemployment release in addition to the poor lead from US stocks which fell on news of a widening investigation into Trump’s collusion with the Russians.


CBA caught in money laundering crosshairs

by Chris Becker News came in just after the close of the markets yesterday that looks set to pull the rug out of its share price on the open this morning. Austrac, the government’s financial intelligence body tasked with enforcing the the Anti-Money Laundering and Counter-Terrorism Financing Act has alleged that “Commonwealth Bank failed to


ASX staggers as Australian dollar goes ballistic

A currency shock is being unleashed upon Australia: How high it goes is anybody’s guess. I still say low 82-83 cents with DXY falling further yet as EUR powers on. But everything is sure getting overheated. Dalian is falling: The ASX is staggering under the load. Big Iron is trying but can’t get far: Big


Are Aussie banks back?

Via UBS’ excellent Jonathon Mott: A few wins for the banks. Are they back on track? After a very tough 2Q when everything seemed to go against them, the banks have had a few big wins in recent weeks. Most importantly, APRA’s light-touch definition of ‘unquestionably strong’ capital even took the bankers by surprise, while


If there is a Hell for bankers, Anna Bligh is going there

Anna Bligh, Fake Premier of the Australian Banking Association, appeared yesterday at the Press Club and, boy, is her soul hurtling towards Hades: To hold trust in someone or something, one must have reliance on their integrity, their strength and their ability. For the major institutions that have been the foundation of western democracies, this


WA to implement its own bank levy?

By Leith van Onselen The Western Australian Government is reportedly mulling whether to emulate South Australia and implement its own bank levy. From The ABC: The WA Government previously expressed an interest in a bank levy similar to that flagged by South Australia, which would tax bank bonds and deposits quarterly at a rate of