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.

8

RMBS arrears falling with debt servicing costs

A new note from Westpac makes it clear today that although interest rate cuts have so far failed to generate much economic return in traditionally sensitive sectors, they are at least reducing arrears at a good clip. This is good news. Any renewed downwards momentum in property prices will have to come from rising unemployment.

18

David Murray gives regulators a caning

Former Future Fund chairman and CBA CEO David Murray has given everyone a post-GFC caning this afternoon: “Governments in Europe an the US have not faced up to structural reform and fiscal discipline as they should have and that’s raised the questions of what is the role of the central bank. If central banks think these [quantitative

9

NAB warns on funding pressures

The emerging debate about bank funding is heating up. The big splash by the Australian Centre for Financial Studies and its Funding the Future project has set things off but NAB wades in today: A senior National Australia Bank exec­utive says global requirements to hold more capital mean banks may not have the funds needed

17

Rent-seeking in Australian finance

Here is how Wikipedia defines rent-seeking: In public choice theory, rent-seeking is an attempt to obtain economic rent by manipulating the social or political environment in which economic activities occur, rather than by creating new wealth. One example is spending money on political lobbying in order to be given a share of wealth that has already been created. A famous example

30

Is your money safe and at what price?

Cross-posted from The Conversation In October 2008, at the height of the Global Financial Crisis (GFC), the federal government decided to guarantee bank deposits. The ‘financial claims scheme‘ (FCS), was an emergency measure to protect the banking system. Initially, deposits up to $1m at ‘authorised deposit-taking institutions’ (ADIs) were insured by the government at no

30

RBA bulldozing APRA?

It’s never been formerly announced but it’s been commented on repeatedly by bankers that for the past few years APRA has insisted that major banks match new deposits to loans on a one-to-one basis. This move has helped shift bank liquidity profiles away from the wholesale funding dependence that has repeatedly caused funding cost spikes

21

Deposit growth jumps in May

APRA is out with its May Banking Statistics and deposit growth took a turn for the better in May, snapping its recent strong down trend. It was 0.7% on the month:   And 7.3% on the year:   The aggregate trend is looking less peaky too:   I’m a bit surprised by this. I thought

27

The Irish banksters exposed

If you want a lesson in why it is bad idea – a very bad idea – to offer government banking guarantees, such as those on offer in Australia, then you cannot go past the tapes recently revealed by the Independent in which executives at Ireland’s Irish Anglo bank joke as they plan their abuse

2

Shadow banks get set to lower lending standards

From Banking Day: Bluestone is getting back into non-conforming lending five years after suspending new loans from its cornerstone product range. …Peter Wood, general manager of asset management for Bluestone, said the firm researched the market for more than a year to work out its options for resuming lending.”We found some niche pockets that were

0

Fitch: Mortgage arrears worsen a touch

From Fitch just now: Fitch Ratings-Sydney-19 June 2013: Fitch’s Dinkum Index, which records 30+ days delinquencies in the Australian prime RMBS sector, remained largely stable in a low interest rate environment, with 30+ days arrears increasing by 2bp to 1.48%. Q113 saw 30-59 and 60-89 days arrears increase by 4 and 3bp respectively, while 90+

4

Will the mining bust hit banks?

A couple of stories today raise questions about the possible transmission of a mining bust into bad loans for banks. At the AFR,  the news is good: The head of business banking at National Australia Bank, Joseph Healy, says a slowdown in the mining sector is yet to trigger an increase in bad debts. Mr

1

Macquarie calls time on Aussie bank yield rally

By Leith van Onselen Macquarie bank has called an end to the Big Four Aussie banks’ yield driven rally following expectations that the US Federal Reserve will reduce its quantitative easing program. From Interest.co.nz: …with financial markets undergoing a shift as investors speculate on the Fed tapering off its QE programme, the Macquarie analysts note

6

AFR erases Australia’s shadow banking history

The usually sound Jonathon Shapiro at the AFR, today does a royal gloss job on the history of Australian shadow banking: The term “shadow banking” is being uttered with increased frequency by politicians and central bankers as they sound warnings about the next big scourge on the stability of the financial system. Clearly, there’s a dark

7

Moody’s brings Cyprus downunder

From Moody’s this morning come news of a possible downgrade for Australian banks in what looks to be blow back from Europe and Cyprus in particular. While it does not have an immediate direct impact on bank creditors one wonders how long senior unsecured debt holders, who are subordinated to both deposits less than $250,000 and

43

Uncovering Australia’s sub-prime mortgage lending

By Leith van Onselen Last year, The Australian newspaper published some great articles questioning the commonly held view that Australia’s banking sector is conservative. In April 2012, The Australian uncovered how Australia’s largest banks were being forced to forgive mortgage debts of borrowers granted loans based on falsified or fraudulent information supplied by mortgage brokers.

11

Deposit growth eases

APRA has released April deposit growth figures and we are seeing possible stabilisation at around the 7% year on year level, though the down trend is intact:   Months on month is still trending down as well:   And the aggregate growth rate leveling off:   Still, at least growth did not show any adverse

0

CBA disappoints

CBA is out with it quarterly update this morning and although the result is in line it is not glowing. From Credit Suisse:   Cash earnings of circa $1.9bn (Credit Suisse 2H13E run-rate $1.914bn; consensus $1.900bn); Reported Profit circa $1.9bn Revenues: 1) CBA stated that trading income 3Q13 “was at a level consistent with the 1H13 run-rate”;

2

Fitch warns on bad loans over mining cliff

From Fitch: Recent results at the four big banks were strong, and such consistent earnings are one of the sector’s key rating strengths. Such earnings performance, together with surplus capital and conservative loan provisions, provide substantial buffers to absorb pressure on earnings in a modest downturn – which is already factored into our ratings. The operating

9

ANZ goes 27bps!

From our second RBA today comes the news that they’ve added on 2 basis points to the RBA cut: ANZ May 2013 Interest Rate Review – Reduces variable mortgage rate by 0.27%pa – ANZ today announced it will lower interest rates for variable rate mortgages by 0.27%pa following its monthly interest rate review. Effective Friday