K: Financial and Insurance Services

Banks to end charging dead, conflicted fees

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Original article by James Frost
The Australian Financial Review – Page: 13 & 17 : 10-Oct-18

The Australian Banking Association has proposed a number of changes to the banking code of practice in response to the misconduct exposed by the financial services royal commission. Amongst other things, banks have agreed to take action to ensure that they do not continue to charge fees after a customer has died, while the banks will ensure that they do not charge fees for services that are not provided or are not needed by a customer. The ABA and its members will also lobby for the complete abolition of trailing commissions for financial advice.

CORPORATES
AUSTRALIAN BANKING ASSOCIATION, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY, AMP LIMITED – ASX AMP, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, WESTPAC BANKING CORPORATION – ASX WBC, MACQUARIE PRIVATE WEALTH MANAGEMENT PTY LTD, CLSA AUSTRALIA PTY LTD, COMMONWEALTH FINANCIAL PLANNING LIMITED, COUNT FINANCIAL LIMITED, FINANCIAL WISDOM LIMITED, COLONIAL FIRST STATE GLOBAL ASSET MANAGEMENT

Bidders are swinging hard for assets in M&A frenzy

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Original article by Joyce Moullakis
The Australian Financial Review – Page: 17 : 10-Oct-18

Data from Dealogic shows that some $US88bn ($124bn) worth of mergers and acquisitions have been announced in Australia so far in 2018. This compares with $US89.3bn for the whole of 2017. Bankers and lawyers expect M&A activity to remain strong, with cashed-up local private equity firms competing with foreign players. Recently announced M&A transactions include KKR’s bid for MYOB and Affinity Equity Partners’ deal to buy Scottish Pacific Group.

CORPORATES
DEALOGIC (AUSTRALIA) PTY LTD, KKR AND COMPANY LP, MYOB GROUP LIMITED – ASX MYO, AFFINITY EQUITY PARTNERS (AUSTRALIA) PTY LTD, SCOTTISH PACIFIC GROUP LIMITED – ASX SCO, PACIFIC EQUITY PARTNERS PTY LTD, LIFEHEALTHCARE GROUP LIMITED, NEXTDC LIMITED – ASX NXT, ASIA PACIFIC DATA CENTRE GROUP – ASX AJD, APA GROUP – ASX APA, CHEUNG KONG INFRASTRUCTURE HOLDINGS LIMITED, AUSTRALIA. FOREIGN INVESTMENT REVIEW BOARD, TRANSURBAN GROUP LIMITED – ASX TCL, WESTCONNEX, WESTFIELD CORPORATION, MINTER ELLISON, SIRTEX MEDICAL LIMITED, CDH INVESTMENTS FUND MANAGEMENT COMPANY, GREENHILL AND COMPANY, NM ROTHSCHILD AUSTRALIA HOLDINGS PTY LTD, WESFARMERS LIMITED – ASX WES, UBS HOLDINGS PTY LTD, MORGAN STANLEY AUSTRALIA LIMITED, MACQUARIE CAPITAL PTY LTD

Banks tumble over advice compo fears

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Original article by Michael Roddan
The Australian – Page: 17 & 20 : 9-Oct-18

The ANZ Bank has advised that its full-year accounts for 2017-18 will include charges totalling $739m in the second half. Amongst other things, ANZ has advised of $374m in charges to compensate customers who paid fees for services they had not received, while its costs associated with the financial services royal commission are expected to total $55m. The major banks will shortly come under scrutiny by the House of Representatives economics committee for the first time since the inquiry began.

CORPORATES
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY, AUSTRALIA. HOUSE OF REPRESENTATIVES STANDING COMMITTEE ON ECONOMICS, WESTPAC BANKING CORPORATION – ASX WBC, AMP LIMITED – ASX AMP, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, UBS HOLDINGS PTY LTD, LIBERAL PARTY OF AUSTRALIA, STANDARD AND POOR’S FINANCIAL SERVICES LLC, MLC LIMITED, MAURICE BLACKBURN PTY LTD, SLATER AND GORDON LIMITED – ASX SGH

6000-point level the next test of new down leg

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Original article by David Rogers
The Australian – Page: 28 : 9-Oct-18

The Australian sharemarket’s 1.4 per cent fall on 8 October was its largest single-day loss since late March, with blue-chip stocks in particular retreating. The bearish investor sentiment also weighed on the Australian dollar, which fell to its lowest level in 2.5 years in local trading. Charting suggests that the S&P/ASX 200 could fall below 6,000 points in coming days, although the earnings outlook means it would be unlikely to remain below this level for very long.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, STANDARD AND POOR’S 500 INDEX, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, BHP BILLITON LIMITED – ASX BHP, CSL LIMITED – ASX CSL, TELSTRA CORPORATION LIMITED – ASX TLS, ARISTOCRAT LEISURE LIMITED – ASX ALL, TREASURY WINE ESTATES LIMITED – ASX TWE, NORSK HYDRO AS, MORGAN STANLEY AUSTRALIA LIMITED, RIO TINTO LIMITED – ASX RIO, SANTOS LIMITED – ASX STO, COCHLEAR LIMITED – ASX COH, RESMED INCORPORATED – ASX RMD, INVOCARE LIMITED – ASX IVC, NUFARM LIMITED – ASX NUF, ANSELL LIMITED – ASX ANN, GOLDMAN SACHS AUSTRALIA PTY LTD, PEOPLE’S BANK OF CHINA

Banks urged to slash branches to offset rising costs

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Original article by Richard Gluyas
The Australian – Page: 19 : 8-Oct-18

Morgan Stanley argues that Australia’s major banks could generate significant savings by closing bank branches and placing greater emphasis on mobile banking. This is one of four scenarios outlined in a new report; however, Morgan Stanley notes that banks are unlikely to significantly reduce the cost of their networks in the next year, given that the sector is under scrutiny at present. Morgan Stanley adds that the major banks could potentially generate large savings by reviewing their multibrand strategies.

CORPORATES
MORGAN STANLEY AUSTRALIA LIMITED, WESTPAC BANKING CORPORATION – ASX WBC, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ

CBA the most popular bank with wealthiest 10% of Australians

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Original article by Roy Morgan
Market Research Update – Page: Online : 8-Oct-18

New research from Roy Morgan shows that the CBA is the clear leader when it comes to banks used by the wealthiest 10% (top decile) of the population, with more than a third (36.7%) being customers. This segment is particularly significant as identified in the "Roy Morgan Wealth Report", which shows that the top decile accounts for 48.3% of Australian households’ net wealth. The big four dominate when it comes to the banks used by the wealthiest 10% of Australians. Individuals in this important segment generally deal with more than one bank, but the banks with the highest penetration are CBA (36.7%), Westpac (25.7%), ANZ (23.7%) and NAB (22.5%). A number of smaller banks have much higher customer penetration in this segment compared to what they have in the total population, including St George (11.3%), ING (7.6%), Macquarie (4.9%) and Citibank (3.9%). These are the latest results from Roy Morgan’s Single Source survey, which is based on in-depth personal interviews conducted face-to-face with over 50,000 Australians per annum in their own homes, including over 5,000 of the wealthiest 10%.

CORPORATES
ROY MORGAN LIMITED, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, WESTPAC BANKING CORPORATION – ASX WBC, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, ST GEORGE BANK LIMITED, ING BANK (AUSTRALIA) LIMITED, MACQUARIE GROUP LIMITED – ASX MQG, CITIBANK LIMITED

Bank cross-selling less successful than widely believed

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Original article by Roy Morgan
Market Research Update – Page: Online : 8-Oct-18

Australian banks’ over-reliance on cross-selling to boost revenue may have been over-stated, according to the latest "share of wallet" data published in the Roy Morgan Banking & Finance Industry Currency Report. The report found that most major banks’ "share of customer wallet" has declined over the past four years, with National Australia Bank Group slipping 3.7 percentage points to 29.5%, CBA losing 2.6 percentage points to sit at 31%, ANZ Group sliding 1.1 percentage points to 27.7% and Westpac down 0.9 percentage points to 28.3%. While there is no doubt the Royal Commission has exposed serious problems in the selling practices of banks, the share of wallet trend highlights increased competition across a number of product categories. The Banking and Finance Industry Currency Report is compiled using data from more than 250,000 in-depth face-to-face, in-home interviews.

CORPORATES
ROY MORGAN LIMITED, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, WESTPAC BANKING CORPORATION – ASX WBC

InvoCare and Propel set to win from Hayne royal commission

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Original article by Simon Evans
The Australian Financial Review – Page: Online : 5-Oct-18

The Hayne royal commission has slammed the funeral insurance sector, and has urged the Australian Securities & Investments Commission to use new product intervention powers to close down "junk funeral insurance". Listed funeral companies InvoCare and Propel Funeral Partners, which offer only pre-paid funeral contracts, are likely to benefit from the commission’s attack on funeral insurance. InvoCare CEO Martin Earp says funeral insurance does not offer value for money, while Propel CEO Albin Kurti contends funeral insurance ends up costing consumers more when compared to pre-paid contracts.

CORPORATES
AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, INVOCARE LIMITED – ASX IVC, PROPEL FUNERAL PARTNERS LIMITED – ASX PFP

Stoked US pushes rates up, $A down

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Original article by John Kehoe, Jacob Greber, Mark Ludlow
The Australian Financial Review – Page: 1 & 10 : 5-Oct-18

The Australian dollar fell to a 2.5 year low of $US0.7078 on 4 October, with analysts tipping it could soon fall to below $US0.70 on the back of rising US interest rates. A combination of higher oil prices and a falling Australian dollar could push petrol prices up above $2 per litre, although a weaker dollar could help to make Australian exports more competitive and lead to reduced demand for more expensive imports. Fitch Solutions Macro Research suggested a rise in oil prices could trigger inflation, which could force the Reserve Bank to lift interest rates sooner than expected.

CORPORATES
FITCH AUSTRALIA PTY LTD, RESERVE BANK OF AUSTRALIA, GRANT SAMUEL AND ASSOCIATES PTY LTD, OUTLOOK ECONOMICS, HSBC AUSTRALIA HOLDINGS PTY LTD

Trust gap will crank up bank funding costs

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Original article by Jonathan Shapiro
The Australian Financial Review – Page: 17 & 20 : 4-Oct-18

Fitch Ratings has warned that a loss of trust in Australian banks in the wake of the financial services royal commission may result in higher wholesale funding costs. Fitch adds that banks may find it hard to pass the increased costs on to borrowers in the current climate. The credit ratings agency also notes that banks could potentially face increased compliance costs and a greater risk of class actions as a result of any recommendations made by the inquiry in its final report. Fitch has retained its negative outlook on banks.

CORPORATES
FITCH RATINGS LIMITED, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY, S&P GLOBAL RATINGS, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, CLSA AUSTRALIA PTY LTD