K62 Finance

Fed, markets split on rate outlook – again

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Original article by Sarah Turner
The Australian Financial Review – Page: 29 : 20-Dec-18

Financial markets have diverged from the Federal Reserve regarding the outlook for US interest rates in 2019, ahead of the central bank’s December board meeting. The general consensus of bond investors is that the Fed will not increase interest rates as rapidly as it has flagged in 2019. Meanwhile, analysts say factors such as the US-China trade war and the downturn in the crude oil price are likely to weigh on the Fed’s monetary policy decision for December.

CORPORATES
UNITED STATES. FEDERAL RESERVE BOARD, GRANT SAMUEL FUNDS MANAGEMENT PTY LTD, FEDERATION ASSET MANAGEMENT, BANK OF AMERICA CORPORATION, MERRILL LYNCH AND COMPANY INCORPORATED

NAB insists its breaches were not criminal acts

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Original article by Ben Butler
The Australian – Page: 13 & 18 : 19-Dec-18

National Australia Bank has conceded that its MLC Nominees subsidiary had breached the Corporations Act and the Australian Securities and Investments Commission Act. The breaches related to so-called plan service fees that the superannuation trustee company had imposed on customers despite not providing any services. NAB has acknowledged in court filings that MLC Nominees’ actions constituted misleading or deceptive conduct. The Australian Securities & Investments Commission launched legal action against NAB in September.

CORPORATES
NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, MLC NOMINEES, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, FEDERAL COURT OF AUSTRALIA, NULIS NOMINEES AUSTRALIA LIMITED, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY

Thorburn to take two long breaks

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Original article by Jonathan Shapiro, Misa Han
The Australian Financial Review – Page: 14 : 18-Dec-18

National Australia Bank has advised that CFO Gary Lennon will become acting CEO while Andrew Thorburn is on extended leave. Thorburn will go on annual leave after NAB’s upcoming AGM, but he will return to work before the final report of the financial services royal commission is released on 1 February. He will subsequently go on long service leave for a month. Thorburn says the two breaks will allow him to "reflect and recharge". It has been a challenging year for the banking sector, and NAB in particular.

CORPORATES
NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY

Dwyer faces opposition to re-election

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Original article by Richard Gluyas
The Australian – Page: 15 : 17-Dec-18

Proxy firms Ownership Matters and ISS are opposing Paula Dwyer’s re-election to the ANZ board at its AGM on 19 December. They cite her heavy workload as chair of Tabcorp and Healthscope as their reasoning behind their objection. ANZ and National Australia Bank will hold their AGMs on the same day, with NAB’s remuneration report almost certain to attract a "first strike", although it is uncertain as to whether ANZ’s report will suffer the same fate.

CORPORATES
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, OWNERSHIP MATTERS PTY LTD, INSTITUTIONAL SHAREHOLDER SERVICES INCORPORATED, TABCORP HOLDINGS LIMITED – ASX TAH, HEALTHSCOPE LIMITED – ASX HSO, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB

NAB faces even bigger remuneration strike

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Original article by James Thomson
The Australian Financial Review – Page: 31 : 14-Dec-18

Investors who account for more than 213 million shares in Westpac abstained from voting on the bank’s remuneration report at its 2018 AGM. Had these shares been voted, the proportion of votes cast that rejected the report could have been much higher than the 63 per cent that was recorded. Meanwhile, there is speculation that the "no" vote at National Australia Bank’s AGM could be at least 70 per cent. Key issues for shareholders are likely to be the bonus received by former executive Andrew Hagger and NAB’s decision to move chairman Ken Henry to a single variable pay structure.

CORPORATES
WESTPAC BANKING CORPORATION – ASX WBC, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY, TELSTRA CORPORATION LIMITED – ASX TLS

New housing loans drop 7.4pc in quarter

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Original article by Samantha Bailey
The Australian – Page: 19 : 13-Dec-18

A new report from the Australian Prudential Regulation Authority shows that $89.2bn worth of new mortgage loans were written in the September quarter, which is 7.4 per cent lower than previously. However, authorised deposit-taking institutions have reported a 5.4 per cent increase in the total value of housing loans in the year to September. Chris Bedingfield of Quay Global Investors says the annual rate of house construction is now too high, given that banks are tightening their lending criteria. He adds that the Reserve Bank is now more likely to reduce rather than raise the cash rate.

CORPORATES
AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, QUAY GLOBAL INVESTORS, RESERVE BANK OF AUSTRALIA

Westpac first to feel wrath of investors

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Original article by Joyce Moullakis, Paul Gardiner
The Australian – Page: 17 & 21 : 13-Dec-18

Westpac’s remuneration report was rejected by 64.2 per cent of shareholders at its AGM on 12 December, the largest "no" vote against a top-20 stock since the "two-strikes" rule was introduced in 2011. Westpac chairman Lindsay Maxsted has acknowledged investors’ angst and says the bank will consider the issues raised at the AGM. Argo Investments CEO Jason Beddow also expects National Australia Bank and the ANZ Bank to experience a big protest vote at their upcoming AGMs, although he adds that it is uncertain whether this will lead to a significant change in remuneration policies.

CORPORATES
WESTPAC BANKING CORPORATION – ASX WBC, ARGO INVESTMENTS LIMITED – ASX ARG, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY, AMP LIMITED – ASX AMP, TELSTRA CORPORATION LIMITED – ASX TLS

Expect the RBA to hold fire on rates

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Original article by James Glynn
The Australian – Page: 27 : 13-Dec-18

The Reserve Bank is still more likely to tighten rather than ease monetary policy, despite recent comments by governor Philip Lowe. He was most likely just outlining how the central bank could be expected to respond – including the potential for quantitative easing – in the event of an economic downturn. Although the Reserve Bank is still concerned about issues such as an emerging credit crunch, the odds still favour a rate rise, although this is unlikely to be for some time.

CORPORATES
RESERVE BANK OF AUSTRALIA

CBA adds to banks’ $1bn bill

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Original article by Joyce Moullakis
The Australian – Page: 17 & 24 : 12-Dec-18

The Commonwealth Bank of Australia has advised that its 2018-19 interim financial results will include an extra $300m in provisions associated with compliance and remediation programs. CBA also announced a provision of $55m for transaction and separation costs regarding the sale of its life insurance business. The bank had previously disclosed a provision of $270m in relation to the ‘fee-for-no-service’ scandal. Australia’s four major banks have now incurred some $1.4bn worth of compensation and compliance costs in the wake of the financial services royal commission.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY, COMMINSURE LIFE, AUSTRALIA. ATTORNEY-GENERAL’S DEPT. AUSTRALIAN TRANSACTION REPORTS AND ANALYSIS CENTRE, MORGAN STANLEY AUSTRALIA LIMITED, SHAW AND PARTNERS LIMITED

ACCC hits big banks, ports, tech

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Original article by James Frost
The Australian Financial Review – Page: 1 & 8 : 11-Dec-18

The Australian Competition & Consumer Commission has concluded that the nation’s four major banks engaged in "synchronised pricing" with regard to increases in interest-only home loan interest rates in June 2017. The big four banks raised their interest rates following the Australian Prudential Regulation Authority’s decision in mid-March to cap interest-only loans at 30 per cent of all new loans from the September quarter. The ACCC estimates that the rate rises boosted the banks’ profits by around $1.1bn.

CORPORATES
AUSTRALIAN COMPETITION AND CONSUMER COMMISSION, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, WESTPAC BANKING CORPORATION – ASX WBC, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIA. PRODUCTIVITY COMMISSION, RESERVE BANK OF AUSTRALIA, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY