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.
Alan Kohler nicely illustrates the closed-shop nature of Australian elite thinking today in arguing that the Murray Inquiry has no point: Joe Hockey committed the Coalition to a “Son of Wallis” or “Granddaughter of Campbell, whatever you will” in a speech the AIG National Forum in October 2010. It was the ninth point of a
From AB+F: In a conference call with journalists following the lender’s interim results, Narev put the hot potato issue of Australian house prices in the freezer by declaring: “we don’t think we have a housing bubble.” “The reasons we don’t think we have a housing bubble is not just because a lot of the incidences
By Leith van Onselen The Customer Owned Banking Association, which represents credit unions and building societies, has lodged a pre-Budget submission to the Government calling for a levy on the Big Four banks, as well as a 50% tax cut on deposits in exchange for a reduction in superannuation concessions – reforms that could save
From Crikey today let’s hope there is more drum beating about the fix that’s in for the Son of Wallis inquiry: When then-treasurer Peter Costello appointed Stan Wallis to conduct a sweeping review of Australia’s financial system shortly after the 1996 federal election, the former Amcor CEO sensibly disposed of all his personal shareholdings in financial
Yesterday we were warned by UBS that bank lending standards are slipping. Today there is another sign that a little exuberance may be creeping back into Australian non-banking as well. From Banking Day: The favourable conditions that prevailed in the securitisation market last year look like they will continue, with the first mortgage-backed securities deal
Cross-posted from DFA blog. Today the Federal Court ruled on the class action against ANZ relating to the bank’s penalty fees. The core of the case was that fees charged for exception transactions were higher than the costs of providing the service. ANZ was found to have charged excessive fees on late payments made to
In my last post, I pointed out the gross inadequacy of APRA’s treatment of Mega Bank as Australia’s D-SIB (Domestic Systemically Important Banks). In essence APRA have stated that although Mega Bank needs to carry a meagre 1% extra capital because it’s a D-SIB, because of other spurious reasons Mega Bank does not actually need
From Banking Day: The Basel Committee on Banking Supervision will make changes to its Pillar 3 (capital adequacy and risk disclosures) regime this year, with the aim of improving the transparency of the banks’ risk-weighted asset modelling practices, and reducing inconsistencies in risk-weighted asset calculations. Speaking at a conference in South Africa last week, the
By Martin North, cross-posted from the Digital Finance Analytics Blog Today APRA published their statistics on the banking business of individual banks in Australia. We see the continued dominance of the four largest players in the market, with CBA winning out on home loans and deposits. Total housing lending now stands at $1,333 bn according
I’ve come out of my self imposed exile, to point out the howler of bank regulation of 2013. There’s been no or little main stream press on this and no comment that I could find and little wonder. APRA saw fit to release this Information Paper on 23 December 2013. This paper is very important
By Martin North, cross-posted from the Digital Finance Analytics blog. Australia’s current credit reporting regime is over twenty years old and permits the collection of only “negative” data. However in March 2014 the credit assessment of potential borrowers is set to change as a result of legislation passed in 2012. Behind the scenes, players are
The AFR has a happy piece this morning on the efforts of ASIC to reign in mortgage fraud: The Australian Securities and Investments Commission is stepping up action against dishonest mortgage brokers as part of a strategy to head off an expected surge in fraud in the hot housing market. The corporate regulator will announce on
Cross-posted from DFA blog. Information about mortgage industry market share data is hard to come by, especially amongst smaller banks and non-banks. So we welcome the arrival of the Australian Financial Group (AFG) Competition Index. AFG is a substantial player in the mortgage market, as an aggregator with than 1,800 brokers nationally, processing around $3 billion of mortgage finance
By Leith van Onselen Credit rating agency, Fitch Ratings, has released its 2014 Outlook for Australian banks, which warns that a weakening domestic economy and heightened competition could create a more challenging environment for Australia’s banks: Profit growth is likely to be modest at best – due to higher impairment charges and net interest margin
By Leith van Onselen The AFR’s Chris Joye is maintaining his rage over Treasurer Joe Hockey’s “Son of Wallis” Financial System Inquiry, which is increasingly looking like a lame duck. Following Joye’s stellar effort over the weekend, arguing that no meaningful reform would take place as long as banking interests lead the inquiry, he has
By Leith van Onselen The AFR’s Chris Joye has delivered a detailed critique of the Coalition’s “Son of Wallis” Financial System Inquiry, which he claims will maintain the status quo and be friendly towards the big banks at the expense of taxpayers: Anyone with exposure to Australia’s $450 billion banking sector should understand the threshold
The RBA’s Guy Debelle is on the hustings promoting banking price rises today: Remarks on Liquidity Guy Debelle Assistant Governor (Financial Markets) Address to the Australasian Finance and Banking Conference Sydney – 17 December 2013 Thank you to Fari for again organising a good conference. Today I will make a few points about liquidity. I have
Fresh from Fitch: Mortgage delinquencies continued to improve, dropping 20 basis points in the third quarter (3Q) of 2013. Strong 2013 issuance and seasonal factors drove improvements across all arrear buckets in 3Q, while 90+ days arrears have benefited from the strong housing market over the past 6 months. Fitch’s Dinkum RMBS Index recorded 30+
Cross-posted from DFA blog. The Australian Bureau of Statistics provides lending for housing statistics each month, and they provide some good data points. However, when you start to dig into the data, it gets quite interesting. We know from our surveys that non-bank lending is on the rise, and that some of the higher loan to
From The Australian: “The world is fundamentally unled…Fiscal policy is not led in America by the secretary of the Treasury and there is no European fiscal union…Therefore central banks have stepped up to take the responsibility for the absence of political leadership in fiscal policy.” …He also warned the government not to be too aggressive
By Leith van Onselen The release today of the quarterly balance of payments data by the Australian Bureau of Statistics (ABS) revealed that gross external liabilities held by depository corporations (mostly banks, but also building societies, credit unions, and registered finance corporations) rose by $9.8 billion over the September quarter of 2013 to $642.9 billion,
Cross-posted from Martin North’s Digital Finance Analytics Blog. Within APRA’s voluminous quarterly ADI data is information of the flow of new loans written by value, separated into LVR bands. With the caveat of course that this does not include non-bank lending, which is rising; it paints an interesting picture of the state of play. As I have
Mac Bank speculates that it is credit supply not demand that is behind recent weak bank business lending: While weak business confidence and borrowing intentions have been considered the drivers of weak business credit growth, we believe an all-too-overlooked factor in weak business credit growth is banks‟ willingness to lend, which is really a reflection of bank
By Leith van Onselen Last week, Bank of Tokyo-Mitsubishi announced the first major salvo by a Japanese bank into the Australian mortgage market, extending a $500 million one-year mortgage-backed facility to AMP Ltd. Today, The AFR reports that US banking giants Citigroup and JP Morgan, who are flush with liquidity following the Federal Reserve’s quantitative easing
APRA has released its monthly banking statistics for October and deposit growth has stabilised. Monthly growth eased: But year on year growth is stable above 6%: The aggregate trend is solid: And households are sustaining their savings habits nicely: Amid falling income growth across the nation this says to me that households remain prudent.
Fresh from the ABC: The financial regulator says it is “working assertively” with banks to make sure they do not slash their home lending standards to chase more business. The Australian Prudential Regulation Authority’s chairman John Laker has told an economics lecture that banks need to remember the lessons of the US housing meltdown. He
UBS does some great work with mortgage flow data today to uncover the mystery of why some house prices can rise so fast but credit growth remain weak: With the housing boom now in full flight the questions keep being asked – Why hasn’t housing credit bounced? If it will, when and by how much?
By Leith van Onselen Bank of Tokyo-Mitsubishi has launched the first major salvo by a Japanese bank into the Australian mortgage market, extending a $500 million one-year mortgage-backed facility to AMP Ltd. Under the arrangement, Bank of Tokyo-Mitsubishi will provide AMP with short-term “warehouse” financing while mortgages wait to be split into pools and then
Banking Day today briefly lists the positions taken up by various interests around the Murray Inquiry: …The Customer Owned Banking Association aired a long running gripe. “While ‘systemic risk’ is covered, there is no explicit reference to the massive hidden subsidy the Big Four banks receive in the form of an implicit government guarantee,” Louise
From the AFR: Australian Bankers Association chief executive Steven Münchenberg said it was important to debate new ideas, but warned that any changes had to support growth and development. “Any new measures must pass the test of ensuring benefits to customers clearly outweigh costs and they should not present risks to system stability or reduce
