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.


Can’t. CBA’s dour result

Via banking legend Ian Rogers: CBA’s full year result for June 2019 on Wednesday will be doing well to carry much good news. Post-royal commission it’s running at 0.5 times system on retail deposits, and margins are preserved for now only by the bond rally. Mortgage growth is a bit better than system, with Commonwealth


Minsky moment arrives for highrise apartment bubble

And so it begins. Market prices crack first. Later comes the economic fallout. We had the price bust now for the casualties, via The Australian: The collapse of the prolific east coast suburban apartment developer Ralan Group, headed by British-born William O’Dwyer, owing creditors at least half a billion dollars has highlighted the fragile state


ScoMo’s property miracle stillborn: specufestor lending fizzles

APRA is out with monthly banking statistics for June, the first clean post-election month. The news is investment mortgages are still on the nose. The stock of loans is still falling: ANZ CBA MQG NAB WBC BOQ BEN SUN Total Jun-19 76774 133761 12643 104660 153525 11340 12811 11756 517270 May-19 77473 133400 12532 104681 153096


ASIC finds its regulatory teeth

The Australian Securities & Investments Commission (ASIC) has launched about 25 cases against banks in the wake of the financial services royal commission. ASIC commissioner Sean Hughes says further legal action is pending, and he says it is possible that further misconduct and wrongdoings in the financial sector will emerge. Hughes adds that banks are


S&P downgrades Aussie mortgage linchpin

Via S&P: Genworth Australia Ratings Lowered To ‘A’ Under Revised Criteria; Outlook Stable • We view that Genworth Australia’s constrained business diversity and challenging market conditions make it increasingly susceptible to competitive pressures, as reflected in a decline in revenue and earnings over recent years. • We are lowering our ratings on Genworth Australia to


Are specufestors “surging” or “upticking” back into property?

Via Domain: The number of people searching for investor loans doubled in the week after the June rate cut, compared to the week before, on comparison platform Finder. …“The doubling of traffic is definitely a significant result there – the interesting thing will be to see whether it has any result in the market,” Finder


Dead man Byers drags APRA into his funeral pyre

Dearly, deary me. APRA is in the fight of its life yet its executive is already dead. At the AFR: Investors are threatening to vote against bonuses calculated under the prudential regulator’s new executive pay rules, putting them on a collision course with the boards of the major banks. Former National Australia Bank chairman Michael


Recessionberg applies CPR to dead man Byers

Deary, deary me. They’ve all lived such lives of entitlement that really don’t know anything about public service at all. It’s all about drawing a preposterously large salary, which undermines the culture of public service in the first place, and then protecting it ahead of the public interest. To wit, the AFR’s conservative attack dog,


Is corrupt APRA preparing the next round of macroprudential?

It had better be. The last time Australia found itself coming out of a housing correction in 2011, MB warned that APRA should tighten macroprudential policy. Instead it waited five years and the rest is bubble history. In part APRA was slowed by the Lunatic RBA which very unwisely campaigned against macroprudential for years. This


Kenneth Hayne signs Wayne Byers death warrant

Wayne Byers must resign, at the AFR today: Kenneth Hayne, who spearheaded the royal commission into the financial services sector, has come out and publicly backed all the recommendations in the APRA capability review and says it is consistent with his own final report. …Hayne’s endorsement of the capability review into APRA, which was released


The law comes calling for a dodgy CBA

Via Banking Day: Two closely related class actions will proceed against Commonwealth Bank over its alleged failure to comply with Anti-Money Laundering laws. Justice David Yates of the Federal Court of Australia in the last week has made “Cooperative Case Management” orders and largely dismissed concerns raised by the bank. The applicant in the Zonia


Centre Alliance: Wayne Byers must resign

Contemporary Australian governance is all about diffused responsibility. Rule one in this new public disorder is to pretend to reform by instructing the demonstrably failed to do it right. It’s virtue signalling writ large that changes nothing while protecting your arse. To wit. Josh Recessionberg, who stupidly reappointed APRA chairman Wayne Byers before he got


Fitch dumps WBC and ANZ onto negative watch

Via Fitch for ANZ: VIABILITY RATING, IDRS AND SENIOR UNSECURED DEBT The revision of the rating Outlook to Negative reflects the risk that ANZ’s focus on remediating operational and compliance risk issues and culture may result in the diversion of resources from ongoing operations, which could ultimately lead to a weakening of ANZ’s earnings relative


Coalition drags chain on Hayne recommendations

The Coalition began implementing some of the Hayne banking royal commission’s recommendations prior to the federal election. However, the government has warned that the bulk of the recommendations are unlikely to be implemented before the end of 2019. Treasury has barely begun the consultation process and drafting of legislative reforms. Shadow treasurer Jim Chalmers says


Wayne Byers is no longer tenable

Chanticleer is expressing public doubts as besieged APRA chairman Wayne Byers couldn’t even front cameras yesterday, preferring a teleconference from his fortress of solitude: This tight control of the dissemination of information and the strategic decision to avoid the nightly news sits oddly with the firm advice in the capability review for APRA to engage


Mortgage arrears stable

Via S&P: Australian prime home-loan arrears stabilized in May after rising in preceding months, according to a recently published report by S&P Global Ratings. The Standard & Poor’s Performance Index (SPIN) for Australian prime mortgages was largely unchanged, declining to 1.52% in May from 1.53% a month earlier. Arrears in May were up 13 basis


APRA staff: Management is captured

At the AFR come stunning leaks from APRA staff via its internal review: “When institutions are consistently able to get a different result by appealing to GM levels and above, line supervisors become demoralised and institutions become emboldened to push the limits,” one employee said. …One employee speaking under the protection of anonymity said the


Wayne Byers must resign immediately

Obviously enough. Via the ABC: An independent review is urging the overhaul of the Australian Prudential Regulation Authority (APRA), slamming it for a poor culture and variable leadership. In a proposed shake-up of the often secretive regulator, a three member panel chaired by former ACCC chairman Graeme Samuel said change was needed. “APRA appears to


RBNZ is a litmus test of Australian monetary failure

As we know, the superb RBNZ has fully integrated monetary and macroprudential policy tools, a creative leadership and national interest values. This enables 300 staff to conduct all of the functions that Australia’s combined monetary regulators fail to do with 1,400. It uses big and dumb rules to govern financial stability, the cash rate when


APRA hit big banks with extra capital charges

by Chris Becker APRA is ordering the remainder of Megabank to hold a little more capital in reserve in case of bad things. From Martin North: APRA has written to ANZ, National Australia Bank (NAB) and Westpac advising of an increase in their minimum capital requirements of $500 million each. The capital add-ons will apply


S&P: Bank outlook stable on “highly supportive” government

From S&P Global Ratings: Major Australian Bank Outlooks Revised To Stable, Macquarie Bank To Positive, After Policy Clarity On Government Support Based on APRA’s announcement today that it is proceeding with its plan to strengthen Australian banks’ loss absorbing capacity–as well as other relevant factors–we believe that the Australian government remains highly supportive of the


Captured APRA waters down bank capital framework

The Australian Prudential Regulatory Authority (APRA) has caved-in yet again, delaying proposed bank capital reforms: The big four banks will have longer than expected to raise extra capital to absorb potential losses after the prudential regulator amended its proposed framework for minimising the fallout from failed institutions. The Australian Prudential Regulation Authority on Tuesday said