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.


Bank boom and bust

There was more creepy coverage of banks at the AFR over the weekend. First was Matthew Stevens: The global financial crisis and the frightening structural risks and uncertainties it triggered appear to be over at last. Only three days after ANZ Banking Group lifted its dividend ratio, Westpac added shareholder-sating sparkle to its own increased interim


Genworth mulls self harm

From the AFR: US-listed Genworth Financial is seeking “more evidence of a good IPO market” in Australia as the company continues to mull an $800 million partial float of its Australian operations. Chief executive Thomas McInerney told analysts that Genworth had not seen a lot of initial public offering activity in Australia. The local division’s


ANZ delivers

At least that’s the verdict of Credit Suisse with the half year result today: Event: ANZ reported (company defined) cash earnings of $3,182mn (up 10% on $2,896mn 1H12) 2% short of our top of market $3,253mn estimate but 1% better than the $3,135mn consensus average. Interim DPS of $0.73 (up 11% on the $0.66 pcp)


Moody’s downgrades QBE

From Moody’s today comes a not unexpected downgrade for QBE. The negative outlook is a bit more surprising: New York, April 21, 2013 — Moody’s Investors Service has downgraded the issuer and senior unsecured debt ratings of QBE Insurance Group Limited (QBE; QBE.AX) to Baa1 from A3. The action completes a review for downgrade initiated on


RBA: Bank offshore borrowings won’t increase

By Leith van Onselen The Q&A session of Tuesday’s speech by RBA Assistant Governor, Guy Debelle, contained an interesting tid-bit on bank offshore borrowings, which Debelle believes will not grow from their current level, and might even fall slightly, over the foreseeable future: Certainly, Debelle’s comments that bank offshore borrowings have peaked are backed-up by


Securitisers ready for more

From Banking Day today comes a glimpse of the future as the AOFM withdraws from the RMBS market: You might expect the financial services industry to argue that, long term, a market should be allowed to fail if it cannot support itself without government support, but there are a large number of industry participants who


Fitch: Mortgage arrears rise in December

The December 2102 quarter of Fitch’s Dinkum Index is out today: Fitch Ratings-Sydney-09 April 2013: Fitch Ratings says that mortgage performance in Australia deteriorated slightly in Q412, despite a low interest rate environment, stable house prices and living costs as well as low unemployment. The Dinkum Index, which records 30+ delinquencies in the Australian prime


Government drops support for RMBS market

By Leith van Onselen In September 2008, only days after the Collapse of Lehmann Brothers in the US (marking the beginning of the Global Financial Crisis), the Australian Treasurer, Wayne Swan, directed the Australian Office of Financial Management (AOFM), the Australian Treasury’s financing arm, to commence purchasing residential mortgage-backed securities (RMBS) from smaller (mostly non-bank)


APRA invites banks to expose their deepest secret

APRA released a discussion paper on Basel III reforms today and it included the following tid bit: In addition, APRA accepts that ADIs may wish to disclose further information on regulatory capital ratios. It therefore proposes to provide anaddendum that compares capital ratios under APRA’s requirements (after applying national discretions) and under Basel III rules


Bank West’s “catastrophic” expansion

The wild west of Australia’s pre-GFC banking expansion is on display today at Banking Day: HBOS Australia and Bankwest incurred lending losses over the four years to 2011 equal to more than one fifth of their loans, a review by a UK parliamentary committee into HBOS, the bank’s then owner, found. The UK committee released


How to fix the CLF

There’s been much recent discussion on MB and from contributors to this blog on the merits of the RBA’s conditional liquidity facility (“CLF”), as well as more broadly recently following a series of articles by Chris Joye at the AFR. I’d like to try and make clear the importance of the CLF and the interconnectedness


What price bank liquidity?

By Leith van Onselen Early last month, the AFR’s Chris Joye wrote a timely article questioning the merits of, and processes around, the RBA’s Committed Liquidity Facility (CLF) for Australia’s banks: The Reserve Bank of Australia’s unique Committed Liquidity Facility – a little-known, taxpayer-backed “line of credit” to help banks overcome solvency crises – creates


Hockey deleveraging

Talking to the ABC this morning, incoming Treasurer Jo Hockey said: “I, like others, have taken advantage of the lower interest rates to try to pay down the principal. But I know, like everyone else, that that’s just a temporary feature.” Well, Joe, if you continue to pay your mortgage ahead of schedule it won’t be


Westpac still hot for deposits

After the RBA’s irresponsible exhortation to the banks to ramp up wholesale borrowing last week it is something a relief to see Westpac today declare that deposits will remain a key focus. From the AFR, according to senior executive Brian Hartzer: Mr Hartzer said on Tuesday that the bank was prioritising growing deposits and strengthening


APRA slams door on bank capital returns

Following Friday’s dreadful speech from APRA’s Charles Littrell, APRA Chairman John Laker delivered better in addressing liquidity requirements  and any prospect of bank capital return. On the first Laker said: “We have already been offered advice that APRA should adopt the revisions without demur, although it is not always clear that commentators have fully understood


APRA swings wildly at macroprudential

Find below a disappointing speech this afternoon from APRA’s Executive General Manager, Charles Littrell, dedicating much time and space to backslapping APRA’s discretionary approach to financial stability and giving macroprudential reform short shrift.  We know that APRA did a poor job in the years before the GFC because without the wholesale intervention of government into the


Norway goes macroprudential

The RBA has stated its position on macroprudential controls thusly: We  also must, of course, heed the lesson that, whatever the framework, the  practice of financial supervision matters a great deal. Speaking of supervisory tools, these days it  is, of course, considered correct to mention that there are other means of ‘leaning against the wind’


The banking man’s paradise

Last week’s eminently sensible suggestion by the Greens that Australian banks should pay fees to the Australian tax-payer for the policies that protect them has again illustrated the parlous state of Australia’s political economy. First of all, why is it only the Greens that have suggested it? The government immediately reiterated its abdication on the


What is the answer to bank liquidity?

Chris Joye has a good piece today examining the shortcomings of the RBA’s Committed Liquidity Facility (CLF) for banks (cash for coconunts as we call it at MB): The Reserve Bank of Australia’s unique Committed Liquidity Facility – a little-known, taxpayer-backed “line of credit” to help banks overcome solvency crises – creates as many problems