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.

14

No banker should run the Wallis Inquiry

For some reason the SMH is floating the idea that former CEO of CBA David Murray will head any post-election Wallis Inquiry: The former chief executive of Australia’s biggest bank says he would consider chairing a review of the country’s financial system if he were asked. David Murray, who steered the Commonwealth Bank through privatisation

22

The bloated business of banking

By Leith van Onselen Following-up on yesterday’s short post questioning the long-term safety and stability of Australia’s banking system, The Australian’s Adam Creighton published an detailed article arguing that Australia’s banks have become far too-big-to-fail, placing taxpayers and the economy at risk of a future financial crisis: LABOR leader Ben Chifley’s quixotic 1947 plan to

0

ANZ hits its targets

A snippet from Mac Bank on the ANZ result below: Subject: ANZ Bank (ANZ AU) (Outperform) – Using the levers to stay on track Stock:  ANZ AU Name:  ANZ Bank Price:  A$30.36 (at 6:10, 15 Aug 13 GMT) Market Cap (m):  A$83,295 Current valuation (DDM/PE):  A$33.52 12mth price target:  A$35.50 Recommendation:  Outperform Volatility index:  Low Event

0

CBA not so hot after all

Mac Bank offers an alternative view of the CBA result: CBA ‘s FY13 result came in a little better than expectations at $7.8bn vs MRE$A7.7bn (consensus – $A7.6bn). Majority of the beat was on impairment (17bp vs. our expectation of 23bp) which was driven by a better outcome in BankWest where there were some provision releases, despite 90 days past due

5

CBA blows ’em away

Commonwealth Bank is out with its annual profit result and has everyone buzzing. Here is BBY: CBA had so much expected of it in this result and it largely delivered: 1.       Income growth was 7% from FY12 to FY13 but a more modest 2.5% from 1H13 to 2H13; 2.       This was achieved through an increase in NIM

4

Cash for coconuts facility gets a lid

APRA yesterday released its new criteria guidelines for access to the RBA’s Committed Liquidity Facility (CLF), which is designed as the fall back for banks should the global financial system ever seize again. Other nations are forcing banks to hold a prescribed portion of liquid assest in the form of  government bonds. The shortage of

7

Where are bank regulators taking us?

Deputy Governor of the RBA, Guy Debelle, gave a good speech last night that sensibly provided support for Australia to adopt the structures of global financial re-regulation: The BIS Committee on Global Financial Stability, on which I sit, has published some work on that recently, but there is more to be done. This is just

24

Bank deposits levy too small?

By Leith van Onselen Despite all of the bleating over the Rudd Government’s proposal to implement a modest levy on deposits to cover the cost of any future bank bailout, an analysis by NAB’s head of fixed income and credit, Michael Bush, has shown that the funds raised would not even cover the costs of

1

Which banks take a levy earnings hit?

J.P. Morgan has a useful note this morning on the impact of the proposed bank levy: Who Wins and Loses? The introduction of the FCS was intended to ‘level the playing field’ to allow all ADIs to have insured deposits to remove ‘depositor bias’ toward larger financial institutions. However, ironically, the insurance fee relative to

21

Bank deposit levy well received

There is the usual bleating from the lobby but for the most part Treasurer Chris Bowen’s new bank levy is being well received. Several serious commentators give it the tick of approval. Chris Joye claims it as his own: The political and economic ramifications of the move are interesting. For years I’ve been calling on

15

More on the bank levy

John Kehoe at the AFR has a much better take than the initial reporting on the new bank deposit levy that appears to be coming: While Labor’s move looks like a blatant cash grab as it tries to fill a budget hole ahead of the federal election, there are reasonable economic grounds for charging banks

44

Bowen to announce bank deposit insurance levy?

The AFR is reporting that the government is set to announce long overdue charges for backstopping banks: The Australian Financial Review has learned that the government’s economic statement, set to be released Friday, will contain a deposit insurance levy as recommended by the Council of Financial Regulators, which will raise funds to underwrite any Australian bank

1

Banks giving back spread on discounts

Another interesting tidbit from Credit Suisse this morning. We all know that banks have been keeping more and more of the spread between the cash rate and mortgage rates over time. And that the likelihood of out-of-cycle interest rate cuts is virtually nil so that the power to maintain net interest margins is not eroded.

10

Another debenture lender freezes

From the SMH: Victoria-based lender Gippsland Secured Investments has frozen $150 million of savings from mostly local investors, putting the future of savings among thousands of rural Victorians in doubt. The move represents the latest regional lender to come under strain following the collapse last year of Banksia Securities, another debenture house which put $660

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