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REPORT: Small Business Inquiry Finds Australian Big Bank Practices Unfair

Posted: February 4th, 2017 | Author: | Filed under: Business and Economy | Tags: , , , , , , | Comments Off on REPORT: Small Business Inquiry Finds Australian Big Bank Practices Unfair

Report Into Australian Bank Practice Finds Lenders UnfairI’ve banked with a small bank – Bendigo Bank – since my return to Melbourne 8 years ago. Australia’s big banks have plenty of critics, and now they can add the Small Business Ombudsman to that fast growing list.

The high profile Ombudsman, Kate Carnell, who has authored a report released today into banking practices, has found lenders are not being fair when they enter into contracts with small and medium-sized businesses.

The big four banks enjoy a $19 billion advantage over their smaller rivals by still being able to self-calculate the riskiness of their home loans according to analysis from the Australian Prudential Regulation Authority.

Despite a new regulatory framework requiring the big banks to hold larger top tier capital buffers, their ability to internally assess their asset risks is still a huge advantage in terms of the amount of “expensive” capital locked up and their ability to access cheaper funding.

While the CBA, NAB, Westpac and ANZ are now required to base their regulatory capital on a blanket of at least 25 percent of mortgages being at risk, smaller lenders must base their risk weightings at 39 percent :: Read the full article »»»»


Reserve Bank Governor Says Australians Too Pessimistic

Posted: June 11th, 2012 | Author: | Filed under: Business and Economy | Tags: , , , , , , | 3 Comments »

Reserve Bank Governor Glenn Stevens Says Australians Too PessimisticAustralia’s Reserve Bank chief, Glenn Stevens says Australians are too pessimistic on the state of the country’s economy, Stevens reckons that we should be much more optimistic over the nations prospects.

Speaking at the American Chamber of Commerce in Australia luncheon in South Australia, Stevens described the nations better than expected growth figures as “quite respectable”. The reserve bank chief said that changes in the world economy present challenges that can easily be overcome.

Stevens said Australia is in a good position to tackle possible world recession sparked by the debt woes facing Europe. He said that economic indicators show that Australia has handled the global financial crisis of 2008 well :: Read the full article »»»»


Banks Rush to Service Offshore Property Investors

Posted: May 19th, 2012 | Author: | Filed under: Business and Economy | Tags: , , , | Comments Off on Banks Rush to Service Offshore Property Investors

Banks Rush to Service Offshore Property InvestorsDespite the plight facing banks whose overexposure to property has forced them to write-down billions in losses, Australia’s four largest banks have increased their exposure to commercial property by $3.8 billion in the last six months, according to a report by The Australian Financial Review.

The sharp increase comes as the banks seek to meet growing interest in Australia’s property market from offshore investors at a time when several major global banks, including the Bank of Scotland International and Royal Bank of Scotland, have withdrawn billions from Australia’s property market.

“There has been a big uptick by offshore investors here and a lot of that is being funded by us and the large banks,” CBA head of property Peter Barnes said, according to the AFRCBRE senior managing director for international investment properties Richard Butler said banks have rushed to capitalise on foreign interest :: Read the full article »»»»


European Study Pours Cold Water on Australian Banks Cost Claims

Posted: February 22nd, 2012 | Author: | Filed under: Business and Economy | Tags: , , , , , , , , , | 1 Comment »

European Study Pours Cold Water on Australian Banks Cost ClaimsElysse Morgan from ABC reports that new research by one of Europe’s biggest banks suggests that Australian banks are hiking interest rates to protect profit margins, not to cover higher funding costs as they have insisted. But the Australian Bankers’ Association has dismissed the study and says lenders may have to raise their rates again.

The study by Societe Generale shows nearly all funding costs for Australian lenders have fallen in the last six months. Societe Generale’s head of strategy in Asia, Christian Carrillo, says the banks’ claims about rising costs are dubious.

“Research suggests that effectively pretty much every source of funding that they use in terms of domestic deposits, short-term funding onshore, long-term funding onshore, has actually gone down,” Mr Carrillo said. “There has been some widening in spreads between offshore funding rates and the rates that they use to hedge against, but if you take into account the overall rate they pay to fund overseas, even that has actually come down slightly.” Read the full article »»»»


>Treasurer Wayne Swan Vows Banks Reform

Posted: November 3rd, 2010 | Author: | Filed under: ...more fun renovation hints | Comments Off on >Treasurer Wayne Swan Vows Banks Reform

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The federal government has vowed to expose Australia’s major banks to more competition, reacting angrily to a move by the nation’s biggest home lender to raise its mortgage rate well beyond the official cash rate.
Treasurer Wayne Swan, describing Commonwealth Bank of Australia Ltd’s hike as a “cash grab”, said the government was now consulting regulators and planned to unveil reforms next month aimed at boosting competition in the sector.
“We need two types of reforms. We need reforms to increase competition in the banking sector, and the government is working on a further package in that area. But we also need a change of attitude from some of our senior executives,” Mr Swan said.
Banking analysts expect the government to take steps to help smaller regional lenders and non-bank mortgage firms but they do not see them posing a huge risk to the top banks.
The top four banks – Commonwealth Bank, National Australia Bank Ltd (NAB), Westpac Banking Corp Ltd and Australia and New Zealand Banking Group Ltd (ANZ) – control more than 80 per cent of the mortgage market.
They have complained of rising wholesale-funding costs, as they refinance debt raised more cheaply before the global finance crisis, and have signalled they may need to raise their lending rates faster than the central bank’s official rate hikes.
At the same time, they have been reporting record profits, angering consumers and putting politicians under pressure to act.
The Senate is planning an inquiry into banking competition, with both sides of politics critical of the banks.
Analysts also expect the government to continue to back the residential mortgage-backed securities market, an important source of funds for smaller lenders, and to give the competition watchdog the power to stop price signalling among banks.
“It took a long time to deregulate the banking system and it will take a long time to re-regulate it as well,” top-rated banking analyst at CLSA Brian Johnson said.
Wong warns on consumer reaction
Meanwhile, Finance Minister Penny Wong has cautioned other major lenders to be aware of customer reaction if they follow CBA’s lead in raising variable mortgage rates.
Senator Wong said Commonwealth Bank customers were entitled to be very upset about the rates decision.
“I would encourage other banks to consider how their customers perceive them moving from the official independent Reserve Bank increase,” she told ABC Radio.
The Australian Bankers Association has defended Commonwealth Bank’s decision to lift its rates above official central bank movements.
“We’re under no illusions about how unpopular these decisions are, we understand that,” chief executive Stephen Munchenberg told ABC Radio.
The banks for some time had been trying to explain to their customers why there was a need to factor in “other considerations” when deciding to raise loan rates.
“We hope people will come to appreciate that.”