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.

15

Murray myopia seizes Kohler

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

3

Credit unions seek charge on too-big-to-fail banks

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

8

Is David Murray conflicted?

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

0

Securitsation market sucks in foreign capital

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

12

Are bank fees excessive?

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

3

The banker’s age of entitlement is powering

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

3

BIS warns banks on internal risk models

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

1

Dissecting APRA’s monthly banking statistics

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

24

APRA embraces too-big-to-fail

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

6

Comprehensive credit reporting: friend or foe?

  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

24

ASIC to rein in housing spruikers

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

0

Who’s winning the mortgage war?

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

0

Fitch lukewarm on Aussie banks

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

27

Chalk-up another win for our too-big-to-fail banks

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

11

Hockey’s Financial Inquiry will pander to big banks

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

6

RBA blows smoke for bank price hikes

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

1

Fitch: RMBS arrears ease

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+

4

The mystery of the missing non-bank lending

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

29

Keating backs macroprudential

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

5

Bank offshore borrowings rose in Sept quarter

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,

9

Credit supply or demand limiting business?

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

2

Securitisation comeback’s financial stability risk

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

3

Deposit growth stable

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.

27

APRA warns banks on bubbles

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

6

Japan enters Aussie mortgage market

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

6

Interests swarm Murray Inquiry

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

11

Bank lobby endorses Murray Inquiry

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