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.
With huge pay packets fast disappearing for the ignominious duo of Andrew Thorburn and Ken Henry at NAB, the former has taken the desperate action of cancelling his preposterously scheduled holidays: In a statement issued on Tuesday morning, he said he plans to lead the bank’s response to the royal commission “personally and visibly”. Mr
George Tharenou at UBS on the Hayne RC and credit flows: Implications: RC still consistent with our view of tighter credit ahead Overall, the RC should not trigger a material acceleration in the tightening of lending standards under way, which should reduce the chance of an imminent ‘credit crunch’. This will likely give some comfort
Via Domain: The Finance Brokers Association is warning the Hayne recommendations could drive up interest rates. The association’s managing director, Peter White, has gone directly to the proposals around mortgage brokers which has also caught the attention of the government. He said eliminating trail commissions for brokers could ultimately push up the price of loans.
A couple of contributions today sum the wider Hayne Royal Commission up. Martin North does a great job of weaving together the strategic strands: But Adele Ferguson, the journalist most responsible for delivering the RC, is critical: Customers were ripped off but the regulators had little or no appetite to use the tools at their
The Hayne pain is here. The most important finding for the economy in the final report is the Commission’s view of the Household Expenditure Measure (HEM) on which its find is quite subtle: 1.2.1 The NCCP Act When dealing with particular case studies in the Interim Report, I concluded that there had been conduct that
Via The Guardian: Australia’s big banks have launched a public mea culpa ahead of the release of the long-anticipated, likely scarifying, findings of the banking royal commission, acknowledging they have failed their customers, and arguing the Hayne report is a chance to reset the sector. With institutions and their shareholders braced for a major shake-up
Justice Kenneth Hayne has delivered his final report on banking crime to Josh Recessionberg and the footage is priceless: Why so pissed, Ken? The AFR offers one explanation: “I remember the number of times in Parliament, the current Prime Minister, he would wag his finger and say you’ll never get a banking royal commission,” Mr
How far down are house prices again? Via The Advisor: The second wave of out-of-cycle rate hikes has continued, with a non-major lender lifting its mortgage rates by up to 18 basis points. ME has announced it will increase its home loan interest rates for both new and existing borrowers by up to 18 basis
Again great stuff from Damien Boey at Credit Suisse who has a much better grasp of the economy than does the lunatic RBA: By now, CPI, unemployment and RBA forecast downgrades are becoming old news … The Consensus view is that the RBA will moderately downgrade its forecasts, but not capitulate on its rate stance
From Chris Joye today: If Prime Minister Scott Morrison pulls off a miracle and wins the May election, housing conditions should stabilise as investors pile back into the market to pick up cheap assets once the threat of Labor’s deleterious tax changes is removed. I also expect the accessibility of credit to improve following the royal
Via The Australian comes Same White, chairman of mortgage broker Loan Market and deputy chairman of the Ray White real estate group: …even the banks’ credit teams were unsure of their lending standards. “There’s no upside in saying yes, only downside, so it’s easier to say no,” he told The Australian. “For most of the major lenders
The lead into Hayne pain has begun in earnest with the corrupt Coalition preparing the ground to do nothing, via the AFR: Mr Frydenberg said the principal focus of the government’s response would be to protect consumers and restore their faith in the sector but ensuring a free flow of credit to households and businesses
ING on the move, via Mozo: Online lender ING has become the latest bank to lift its variable home loan rates following an announcement earlier today. The lender will raise rates across all of its variable rate home loan products by 15 basis points, effective as of February 7, 2019. And according to Mozo Product Data Manager,
APRA released December mortgage lending this morning and the investor retreat continues apace. Growth at top eight banks has now stalled out completely, rising just 0.6% year on year: With month month lending still slowing even more: ANZ CBA MAC NAB WBC BOQ BEN SUN Total -0.5 0.2 1.4 -0.2 0.1 -0.2 0.1 0.4 0.0
And here you go with Endeavour’s full monty HEM housing crash report published with permission from the author. Click here.
Via Banking Day: The deferral of the release of the final report of the Royal Commission into misconduct in banking until late Monday afternoon next week won’t help any banks or investors or a government losing its cool in the countdown to Australia’s upcoming election. The final report will be publicly released at 4.10pm on
by Chris Becker Couldn’t have happened to a nicer ticket puncher with a huge slash to profits in the wake of the Royal Commission. From ABC: In a statement to the ASX, AMP further downgraded its already weak profit guidance, reporting that its net profit for the 2018 calendar year would be “approximately $30 million”
From Damien Boey at Credit Suisse Yesterday, NAB announced a 12bps increase on owner-occupier conventional mortgages, and a 16bps increase on interest-only investor mortgages. In the round of out-of-cycle rate hikes last year, NAB was the odd one out, choosing not to hike with its competitors. Therefore, today’s hike brings NAB more in line with
By Leith van Onselen Earlier this week, Labor’s Shadow Treasurer, Chris Bowen, wrote to Treasurer Josh Frydenberg urging him to publicly release the banking royal commission final report as soon at it is handed in to the federal government: “It is in the national interest for the Australian people and victims of banking scandals to
By Leith van Onselen After being badly exposed by the royal commission for failing to stand up to the financial sector, it has been revealed that Australia’s regulators have commissioners and staff to accept secret gifts from the industries they regulate. From The SMH: Presents in recent years include champagne and vintage wines, expensive dinners, concert
By Leith van Onselen Labor remains unflappable in the face of the housing bust. In addition to doubling down on its negative gearing and capital gains tax policy, Labor has vowed to implement in full the banking royal commission’s recommendations. From The AFR: A Labor government will seek to carry out all the recommendations of
By Leith van Onselen As house prices fall, and the economy begins grinding to a halt, we are witnessing the start of the housing bust blame game. In recent weeks, we’ve witnessed L-Plate Treasurer, Josh Frydenberg, urge the banks to lend: “My message to the banks is still very clear – keep the books open.
By Leith van Onselen Last week it was Virgin, today NAB-owned U-Bank has announced that it will lift its mortgage rates by up to 20-basis points. From The Adviser: The second wave of out-of-cycle mortgage rate hikes has continued, with another lender announcing increases of up to 20 basis points. NAB-owned lender UBank has announced
By Leith van Onselen Australia’s Big Four banks are pushing back hard against an APRA proposal for them to raise an additional $75 billion in Tier 2 bonds to meet “too-big-to-fail” capital requirements. From The AFR: That APRA paper, released on November 8 said the banks should raise additional Tier II funds to comply with
As predictable as the Sun rising: BOQ today announced interest rates across a range of lending products will be increasing by between 11 basis points (bps) and 18 bps. The Economy Owner Occupier Principal and Interest rate is increasing by 11bps A number of other BOQ home loans and lines of credit rates are increasing
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
I’m back Monday but here’s a little warm up post. The politico-housing complex has joined the new year with a wailing siren of destruction. Leading off is disastrous L-plate Treasurer, Josh Frydenberg, who appears to have qualified for the job only thanks to an apposite moral flexibility, via the AFR: “Now that APRA have lifted
Bravo Chris Joye who appears to be the only other writer with any balls or brains in the financial press today: RBA governor Phil Lowe needs to pull his head in. It’s fine for him to tell the banks to loosen their lending standards, but he isn’t the one being sued by ASIC on the
The AUD is still struggling through the day: XJO is down a touch: Bonds are well bid at the long end: Dalian is firm: And Big Iron: Big Gas is weak: With Big Gold: Big Banks are still under pressure other than the magical CBA which apparently lends elsehwere: The RBA may not want to
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
