I’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 »»»»