K: Financial and Insurance Services

All eyes on big four as Macquarie lifts rates

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Original article by Joyce Moullakis
The Australian Financial Review – Page: 11 & 16 : 10-Jul-18

There is growing speculation that Australia’s four major banks will increase their mortgage interest rates independently of the Reserve Bank. Macquarie is the latest bank to have advised of a rise in its variable rates for new and existing customers. Jonathan Mott of UBS says the large banks may opt to lift their rates in coming months to reflect the increase in their wholesale funding costs, although Sean Fenton of Tribeca Investment Partners notes that the major banks may be wary of attracting further political scrutiny at present. Some smaller lenders recently increased their mortgage rates.

CORPORATES
MACQUARIE GROUP LIMITED – ASX MQG, RESERVE BANK OF AUSTRALIA, UBS HOLDINGS PTY LTD, TRIBECA INVESTMENT PARTNERS PTY LTD, PEPPER GROUP LIMITED, AMP BANK LIMITED, SUNCORP BANK, AUSWIDE BANK LIMITED – ASX ABA, IMB LIMITED, ME BANK, BANK OF QUEENSLAND LIMITED – ASX BOQ, MORGAN STANLEY AUSTRALIA LIMITED, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY

Susceptible $A tipped to fall to US70c

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Original article by Sarah Turner
The Australian Financial Review – Page: 27 : 10-Jul-18

Some economists are bearish about the outlook for the Australian dollar, which has traded at close to a 12-month low since mid-June. Stephen Roberts of Laminar Capital expects the currency to be trading at $US0.70 at the end of 2018, citing the prospect of a growing gap between official interest rates in Australia and the US. Elliot Clarke of Westpac in turn expects the Australian dollar to test the $US0.70 level in the second half of 2019.

CORPORATES
LAMINAR CAPITAL, WESTPAC BANKING CORPORATION – ASX WBC, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, BANK OF AMERICA AUSTRALIA LIMITED, MERRILL LYNCH (AUSTRALIA) PTY LTD, RESERVE BANK OF AUSTRALIA

Directors hit in Hayne fallout

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Original article by Alice Uribe
The Australian Financial Review – Page: 1 & 2 : 9-Jul-18

Providers of directors’ and officers’ insurance have increased their premiums by an average of 70 per cent over the past six months due to costs incurred as a result of class actions. Eden Fletcher of Aon Risk Solutions notes that providers have moved to prevent further losses on class action policies they offer by inserting exclusions that would see them refuse to cover companies hit by class actions resulting from the banking royal commission. There are potentially up 20 class actions pending as a result of the royal commission, with AMP alone facing five lawsuits over its fee-for-no-service scandal.

CORPORATES
AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY, AON RISK SERVICES AUSTRALIA LIMITED, AMP LIMITED – ASX AMP, CHUBB CORPORATION, BERKSHIRE HATHAWAY INCORPORATED, AUSTRALIAN LAW REFORM COMMISSION, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, BENDIGO AND ADELAIDE BANK LIMITED – ASX BEN, RABOBANK AUSTRALIA LIMITED, QBE INSURANCE GROUP LIMITED – ASX QBE, AUSTRALIAN INSTITUTE OF COMPANY DIRECTORS, AMERICAN INTERNATIONAL GROUP INCORPORATED, XL CATLIN

Sunsuper swallows another fund

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Original article by Joanna Mather
The Australian Financial Review – Page: 16 : 6-Jul-18

Sunsuper will merge with AustSafe Super, a $2.2 billion industry super fund that targets regional and rural Australians. The merger will create a $58 billion fund with 1.4 million members. The Australian Prudential Regulation Authority is keen to see smaller superannuation funds merge, while Sunsuper CEO Scott Hartley believes that the sector will consolidate to the point where only half a dozen "mega" funds remain.

CORPORATES
SUNSUPER PTY LTD, AUSTSAFE PTY LTD, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, KINETIC SUPER, AUSTRALIA. PRODUCTIVITY COMMISSION, CHANT WEST FINANCIAL SERVICES PTY LTD

Low rates may trigger shock

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Original article by Jacob Greber
The Australian Financial Review – Page: 1 & 3 : 6-Jul-18

Keeping official interest rates low for too long could have dire consequences, according to the Bank for International Settlements’ Committee on the Global Financial System. The committee warns that it could lead to a rise in inflation, which in turn would force central banks to hike up interest rates, resulting in a global recession. Under one scenario put forward by the committee, inflation could rise by two per cent, forcing central banks to lift short-term interest rates by 300 basis points. In Australia, this would result in economic growth falling to 0.5 per cent.

CORPORATES
BANK FOR INTERNATIONAL SETTLEMENTS, RESERVE BANK OF AUSTRALIA

ANZ bracing for fallout over AmBank stake as $4.5bn 1MDB scandal erupts

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Original article by Ben Butler
The Australian – Page: 17 & 21 : 5-Jul-18

The ANZ Bank has a 24 per cent stake in Malaysia’s AmBank, which has become embroiled in the scandal over the siphoning of funds from the nation’s 1MDB sovereign wealth fund. Malaysia’s former prime minister Najib Razak is alleged to have channelled 1MDB’s funds into his AmBank account. Brian Johnson of CLSA says ANZ or its executives could potentially be drawn into the corruption scandal. CEO Shayne Elliott is among the ANZ executives who have previously served on AmBank’s board.

CORPORATES
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, AMBANK BERHAD, 1MDB, CLSA AUSTRALIA PTY LTD, BERNAMA, SARAWAK REPORT, SRC INTERNATIONAL, KUMPULAN WANG PERSARAAN (DIPERBADANKAN), UNITED STATES. DEPT OF JUSTICE, THE GOLDMAN SACHS GROUP INCORPORATED

No more low-doc lending, CBA says

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Original article by Anthony Klan
The Australian – Page: 6 : 5-Jul-18

The Commonwealth Bank of Australia has advised that it will cease issuing low-documentation mortgage loans. These products have come under scrutiny amid revelations that mortgage brokers have falsified clients’ income in order to write loans. Low-documentation loans now account for 1.8 per cent of mortgage loans, compared with 7.6 per cent in 2010. CBA also intends to shift from a volume-based remuneration system for mortgage brokers rather than one based on the value of loans written.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY

Macquarie exits trailing commissions

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Original article by James Kirby
The Australian – Page: 22 : 4-Jul-18

Macquarie Group’s decision to scrap trailing commissions for financial advisers has been welcomed by Bernie Ripoli, who played a key role in the Future of Financial Advice reforms. However, so-called grandfathered commissions are still widely used in the financial services sector four years after the FoFA reforms. There is speculation that the banking royal commission will recommend the abolition of trailing commissions. Ripoli says other banks could potentially opt to voluntarily scrap them.

CORPORATES
MACQUARIE GROUP LIMITED – ASX MQG, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY, BT FINANCIAL GROUP PTY LTD, WESTPAC BANKING CORPORATION – ASX WBC, AMP LIMITED – ASX AMP, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, SAS GROUP CONSULTING

ASIC calls for crackdown on card sharks

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Original article by Richard Gluyas
The Australian – Page: 19 & 22 : 4-Jul-18

A review of the credit card industry by the Australian Securities & Investment Commission has found that many consumers are finding it hard to repay their debt. ASIC deputy chair Peter Kell says relatively few card issuers actively take action to address such problems. In addition to being in arrears, many consumers have been issued with credit cards that are inappropriate for their needs. ASIC has proposed new rules whereby a consumer’s credit card debt would be restricted to their capacity to repay it within three years.

CORPORATES
AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, RESERVE BANK OF AUSTRALIA, CITIGROUP PTY LTD, LATITUDE GROUP, AMERICAN EXERGEN CORPORATION, MACQUARIE GROUP LIMITED – ASX MQG

RBA holds rates firm, defying global trend

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Original article by Adam Creighton
The Australian – Page: 19 & 27 : 4-Jul-18

Financial markets have priced in little chance of monetary policy tightening by April 2019 after the Reserve Bank of Australia left the cash rate unchanged at 1.5 per cent on 3 July. Economists note that the wording of the statement issued by governor Philip Lowe was largely similar to the previous month. Lowe 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. He also noted the potential for a trade war to impact on global economic growth

CORPORATES
RESERVE BANK OF AUSTRALIA, BANK FOR INTERNATIONAL SETTLEMENTS, AUSTRALIAN BUREAU OF STATISTICS, HSBC AUSTRALIA HOLDINGS PTY LTD, WESTPAC BANKING CORPORATION – ASX WBC