K62 Finance

Hayne to lift lid on bank confessions

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Original article by Richard Gluyas
The Australian – Page: 19 & 23 : 3-Oct-18

The financial services royal commission has selectively released information on the admissions of misconduct by the major banks. Commissioner Kenneth Hayne requested the information in early 2018, and a spokesman for the inquiry has downplayed suggestions that it may shortly release the banks’ full submissions. Industry sources have indicated that the potential for class actions against the banks will increase if the so-called "confession statements" are fully disclosed.

CORPORATES
AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, AMP LIMITED – ASX AMP, CLAYTON UTZ, FEDERAL COURT OF AUSTRALIA

S&P pushes banks down global ranks

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Original article by Jonathan Shapiro
The Australian Financial Review – Page: 1 & 16 : 3-Oct-18

The global ranking of Australia’s major banks has fallen sharply in terms of risk adjusted capital, which is S&P Global Ratings’ preferred measure of the sector’s financial strength. The nation’s four largest banks are ranked in the 40th to 50th percentile in S&P’s latest survey of the world’s top 100 banks. The Financial System Inquiry in 2014 had recommend that the big four banks should be within the top quartile of global banks in terms of capital strength. Regaining "unquestionably strong" status would require them to raise more capital.

CORPORATES
S&P GLOBAL RATINGS, CITIGROUP PTY LTD, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, BANK FOR INTERNATIONAL SETTLEMENTS, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB

RBA keeps cash rate at 1.5pc, but sees clouds on horizon

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Original article by Sarah Turner
The Australian Financial Review – Page: 9 : 3-Oct-18

The latest quarterly survey of economists shows that the general consensus is that a rise in the cash rate is unlikely before late 2019. The Reserve Bank of Australia left official interest rates unchanged on 2 October, and governor Philip Lowe has reiterated that progress in reducing the unemployment rate and lifting inflation to the RBA’s target range of 2-3 per cent is likely to be gradual. Gareth Aird of the Commonwealth Bank expects the outlook for the housing market to influence the timing of any change in monetary policy.

CORPORATES
RESERVE BANK OF AUSTRALIA, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, WESTPAC BANKING CORPORATION – ASX WBC, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB

Banking code of conduct needs more bite

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Original article by James Eyers
The Australian Financial Review – Page: 16 : 2-Oct-18

The banking royal commission’s interim report urged the Australian Securities & Investments Commission to be aggressive in enforcing the Banking Code of Conduct. Australian Small Business & Family Enterprise Ombudsman Kate Carnell has backed the commission’s call for ASIC to be more proactive in enforcing the Banking Code of Conduct, while she has suggested that many small businesses will be disappointed by the commission’s interim report.

CORPORATES
AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, AUSTRALIA. OFFICE OF THE AUSTRALIAN SMALL BUSINESS AND FAMILY ENTERPRISE OMBUDSMAN, AUSTRALIAN COMPETITION AND CONSUMER COMMISSION, BANKWEST, AUSTRALIAN BANKERS’ ASSOCIATION

Risk of credit crunch is real and rising, UBS warns

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Original article by James Frost
The Australian Financial Review – Page: 16 : 2-Oct-18

Jonathan Mott of UBS has told clients that Australian banks’ profits are likely to come under pressure in the next several years as a result of the financial services royal commission. He says the risk of a credit crunch has been heightened following the release of the inquiry’s interim report. Mott adds that amongst other things, the final report is likely to recommend extending responsible lending obligations to small and medium enterprises and an overhaul of the way banks verify the expenses of borrowers.

CORPORATES
UBS HOLDINGS PTY LTD, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY

Rates gulf with US is at its widest yet

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Original article by Patrick Commins
The Australian Financial Review – Page: 30 : 28-Sep-18

The divergence between official interest rates in Australian and the US has widened to its highest level since the Reserve Bank adopted inflation targeting in the 1990s. The Federal Reserve’s 25 basis point increase in the cash rate is its eighth rate rise in less than three years, while the Reserve Bank has left rates on hold since August 2016. Bloomberg expects another two US rate rises in the next year, while Australian rates could well remain on hold. Economists say a further widening of the interest rate differential could put downward pressure on the Australian dollar.

CORPORATES
UNITED STATES. FEDERAL RESERVE BOARD, RESERVE BANK OF AUSTRALIA, BLOOMBERG LP, WESTPAC BANKING CORPORATION – ASX WBC, CAPITAL ECONOMICS LIMITED

Banks’ legal bills in mega millions

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Original article by Misa Han, Joanna Mather
The Australian Financial Review – Page: 10 : 28-Sep-18

Australia’s four major banks have incurred significant costs associated with the financial services royal commission. Westpac’s costs in the first half of 2018 were around $34m, and it expects its costs to be similar in the second half, while National Australia Bank has advised that its inquiry-related costs could rise to $30m in the second half, up from $10m in the first half. Meanwhile, law firms will miss out on a key source of revenue, as the royal commission’s own legal work is being handled by the Australian Government Solicitor.

CORPORATES
AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY, WESTPAC BANKING CORPORATION – ASX WBC, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, AMP LIMITED – ASX AMP, IOOF HOLDINGS LIMITED – ASX IFL, AUSTRALIAN GOVERNMENT SOLICITOR, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, AUSTRALIA. ATTORNEY-GENERAL’S DEPT. AUSTRALIAN TRANSACTION REPORTS AND ANALYSIS CENTRE, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, CORRS CHAMBERS WESTGARTH, JOHNSON WINTER AND SLATTERY

Satisfaction with banks declines during Finance Royal Commission but remains positive

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Original article by Roy Morgan
Market Research Update – Page: Online : 28-Sep-18

New research from Roy Morgan shows that bank customer satisfaction has declined from 81.2% in the six months to January 2018, prior to the Finance Royal Commission, to 78.9% in the six months to August 2018, which is unchanged from July. The decline of 2.3% points since January has resulted in the lowest satisfaction rating since June 2012, but it remains above the long-term average of 74.2%. Meanwhile, the level of dissatisfaction with banks is low and has increased only marginally from 4.9% in January to 5.7%. The combination of the 15.4% of bank customers who are indifferent to their relationship with their bank (i.e. neither satisfied or dissatisfied) and those who are dissatisfied (5.7%), means that more than one in five (21.1%) bank customers pose a potential threat to customer retention, up from 18.9% in January 2018 but well below the 2001 level of 40.1%. Roy Morgan’s "Customer Satisfaction-Consumer Banking in Australia August Report" is based on in-depth interviews conducted face-to-face with over 50,000 consumers per annum in their homes, including over 4,000 bank customers per month.

CORPORATES
ROY MORGAN LIMITED

Federal Reserve hikes rates for third time this year

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Original article by Donna Borak
CNNMoney – Page: Online : 27-Sep-18

The Federal Reserve has increased the federal funds rate by 25 basis points to a range of 2% to 2.25% in a move than had been widely expected. It is the third interest rate rise in 2018, and a majority of Federal Reserve policymakers now favour a fourth increase in December. Central bank policymakers also anticipate three rate rises in 2019, while the Federal Reserve has upgraded its forecast for US economic growth in 2018 from 2.8% to 3.1%. However, growth is expected to slow to 2.5% in 2019.

CORPORATES
UNITED STATES. FEDERAL RESERVE BOARD, UNITED STATES. FEDERAL OPEN MARKET COMMITTEE

Hayne interim report to shake the sector

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Original article by Richard Gluyas
The Australian – Page: 21 : 26-Sep-18

The financial services royal commission’s interim report will only cover the inquiry’s first four rounds of public hearings. The report will be tabled in federal parliament on 28 September, and the last two public hearings to date will be included in the inquiry’s final report, which is slated to be released in February. Richard Sproules of Citigroup expects the interim report to focus on the issues of responsible lending and governance failures in the provision of financial advice.

CORPORATES
AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY, CITIGROUP PTY LTD, MORGAN STANLEY AUSTRALIA LIMITED, AUSTRALIA. OFFICE OF THE GOVERNOR-GENERAL