K62 Finance

$A one tweet away from a tumble, says Westpac

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Original article by Jonathan Shapiro
The Australian Financial Review – Page: 20 : 9-Jan-17

Modelling by Westpac suggests that the Australian dollar is about eight per cent below "fair value" at present. Westpac’s Robert Rennie warns that the dollar is vulnerable to another sell-off if US president-elect Donald Trump prompts a trade war with China. Meanwhile, Westpac expects commodity prices to fall in 2017. The bank also anticipates that Australia’s cash rate will remain unchanged while there will be two rate rises in the US.

CORPORATES
WESTPAC BANKING CORPORATION – ASX WBC, UNITED STATES. EXECUTIVE OFFICE OF THE PRESIDENT, RESERVE BANK OF AUSTRALIA, UNITED STATES. FEDERAL RESERVE BOARD

Big four looking good on capital

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Original article by Tony Boyd
The Australian Financial Review – Page: 40 : 5-Jan-17

Australia’s major banks are unlikely to be affected by a dispute between the European banks and the Basel Committee on Banking Supervision. Predictably, the European banks are resisting the committee’s stricter capital requirements. The committee stated on 4 January 2017 that aid the regulatory reforms would be delayed as more time is needed to finalise some of their aspects. Unlike the European banks, the big four Australian banks have sufficient levels of common equity tier 1 capital to meet the committee’s new requirements.

CORPORATES
BANK FOR INTERNATIONAL SETTLEMENTS. BASEL COMMITTEE ON BANKING SUPERVISION, DEUTSCHE BANK AG, SOCIETE GENERALE SA, UNICREDIT SPA, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, FITCH INVESTORS SERVICE INCORPORATED, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, WESTPAC BANKING CORPORATION – ASX WBC, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB

ANZ leads in the big four investing game

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Original article by Tony Boyd
The Australian Financial Review – Page: 40 : 4-Jan-17

The ANZ Banking Group is selling its 20 per cent stake in the Shanghai Rural Commercial Bank for $A1.8 billion. The transaction will have a positive effect on the bank’s common equity tier 1 capital ratio, raising it to the highest level among Australia’s big four banks. Shareholders have reasons to be satisfied. The bank is likely to increase its return on equity.

CORPORATES
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, SHANGHAI RURAL COMMERCIAL BANK, ESANDA FINANCE CORPORATION LIMITED, MACQUARIE GROUP LIMITED – ASX MQG, DBS GROUP HOLDINGS LIMITED, WESTPAC BANKING CORPORATION – ASX WBC, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA

ANZ fires up Asia exit in $1.8b sale

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Original article by James Frost
The Australian Financial Review – Page: 1 : 4-Jan-17

ANZ Banking Group is retreating from Asia, with the latest transaction being the sale of its 20 per cent stake in Shanghai Rural Commercial Bank for $A1.8 billion. The stake is being acquired in two equal tranches by China COSCO Shipping Corporation and Shanghai Sino Poland Enterprise Management Development Corporation. The sale will result in a rise in ANZ’s tier one capital ratio from 9.6 per cent to 10 per cent.

CORPORATES
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, SHANGHAI RURAL COMMERCIAL BANK, ESANDA FINANCE CORPORATION LIMITED, MACQUARIE GROUP LIMITED – ASX MQG, DBS GROUP HOLDINGS LIMITED, CHINA COSCO SHIPPING CORPORATION, SHANGHAI SINO POLAND ENTERPRISE MANAGEMENT DEVELOPMENT CORPORATION, BANK OF TIANJIN COMPANY LIMITED, AMBANK BERHAD

ASIC raps banks for forex faults

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Original article by Michael Bennet
The Australian – Page: 13 & 18 : 22-Dec-16

National Australia Bank and the Commonwealth Bank have agreed to enforceable undertakings from the Australian Securities & ­Investments Commission regarding their wholesale spot foreign exchange businesses. It follows ASIC’s investigation into inappropriate conduct by foreign exchange traders at the two major banks. Three of the nation’s "big four" banks are also the subject of legal action over allegations that they manipulated the bank bill swap rate.

CORPORATES
NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, WESTPAC BANKING CORPORATION – ASX WBC, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, FEDERAL COURT OF AUSTRALIA, MACQUARIE GROUP LIMITED – ASX MQG

Split emerges on interest rates forecast

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Original article by Jessica Sier
The Age – Page: 20 : 22-Dec-16

Westpac and ANZ Bank economists expect Australia’s cash rate to remain unchanged in 2017, while National Australia Bank suggests that there is potential for two rate cuts. Financial markets have responded to the release of the minutes of Reserve Bank’s December 2016 board meeting by lifting the chances of a rate rise in 2017 from 40 per cent to 55 per cent. The minutes show that the central bank is concerned about the residential property market and the level of household debt.

CORPORATES
WESTPAC BANKING CORPORATION – ASX WBC, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, RESERVE BANK OF AUSTRALIA, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, UNITED STATES. FEDERAL RESERVE BOARD

Mortgage stress strikes bush, city amid fears of an interest rate hike

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Original article by Michael Bennet
The Australian – Page: 13 & 18 : 21-Dec-16

Standard & Poor’s has reported that the number of Australian mortgage borrowers in arrear rose in October 2016. Digital Finance Analytics has identified the 20 postcodes across Australia that boast the highest level of mortgage stress. Many of these are in regional areas, although the list includes a number of suburbs in major capital cities. Martin North of DFA says the outlook for interest rates will determine whether there is an increase in home loan arrears and defaults. He anticipates that the cash rate will rise by 50 basis points in 2017.

CORPORATES
DIGITAL FINANCE ANALYTICS, STANDARD AND POOR’S FINANCIAL SERVICES LLC, RESERVE BANK OF AUSTRALIA, WESTPAC BANKING CORPORATION – ASX WBC, ALLIANCEBERNSTEIN HOLDING LP, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, BANK OF QUEENSLAND LIMITED – ASX BOQ, CLSA AUSTRALIA PTY LTD

Lenders see sanity return to home loans

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Original article by Michael Bennet
The Australian – Page: 15 & 18 : 19-Dec-16

Bendigo & Adelaide Bank CEO Mike Hirst notes that Australia’s four major banks are offering smaller discounts on mortgage interest rates than in the first half of 2016. He adds that the banks would have struggled to achieve a good return on these loans given the size of some discounts. Credit Union Australia CEO Rob Goudswaard expects a rise in mortgage interest rates after a period of intense competition. He also does anticipate a rise in the cash rate in 2017.

CORPORATES
BENDIGO AND ADELAIDE BANK LIMITED – ASX BEN, CREDIT UNION AUSTRALIA LIMITED, BANK OF QUEENSLAND LIMITED – ASX BOQ, LIBERTY FINANCIAL PTY LTD, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, RESERVE BANK OF AUSTRALIA, UNITED STATES. FEDERAL RESERVE BOARD, CREDIT SUISSE (AUSTRALIA) LIMITED, DIGITAL FINANCE ANALYTICS, DEUTSCHE BANK AG

US hike won’t deter the RBA from following suit

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Original article by David Rogers
The Australian – Page: 28 : 14-Dec-16

The US Federal Reserve’s monetary policy statement is likely to attract more scrutiny than the outcome of its December 2016 meeting, as it is generally expected to lift the cash rate by 25 basis points. Meanwhile, the fall in National Australia Bank’s latest business conditions survey may strengthen the case for the Reserve Bank of Australia to further reduce official interest rates, particularly in the wake of the higher-than-expected decline in GDP growth for the September quarter.

CORPORATES
UNITED STATES. FEDERAL RESERVE BOARD, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, RESERVE BANK OF AUSTRALIA, UNITED STATES. FEDERAL OPEN MARKET COMMITTEE, FEDERAL RESERVE BANK OF ST LOUIS, JP MORGAN AUSTRALIA LIMITED

Alarm as economic growth stalls

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Original article by David Rogers
The Australian – Page: 19 & 32 : 8-Dec-16

The Australian economy expanded by just 1.8 per cent in the year to September 2016. The Federal Government’s upcoming mid-year Budget update is likely to include a downgraded 2016 economic growth forecast, which was tipped to be 3.25 per cent in the Budget in May. However, Paul Bloxham of HSBC notes that GDP has not fallen for two consecutive quarters since 1991. Nevertheless, the national accounts for the September quarter may strengthen the case for further official interest rate cuts.

CORPORATES
HSBC AUSTRALIA HOLDINGS PTY LTD, RESERVE BANK OF AUSTRALIA, AUSTRALIAN BUREAU OF STATISTICS, LEHMAN BROTHERS INCORPORATED, MACQUARIE GROUP LIMITED – ASX MQG, WESTPAC BANKING CORPORATION – ASX WBC