K: Financial and Insurance Services

Why Commonwealth is still the investors’ favourite, 25 years on

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Original article by James Frost
The Australian Financial Review – Page: 18 : 13-Sep-16

The first tranche of Commonwealth Bank shares were issued at $A5.40 apiece in September 1991. Investors who took up the minimum of 400 shares in the float and reinvested their dividends over the following 25 years would now hold $A131,371 worth of shares in Australia’s largest bank. Financial market observers note that the first stage of the Commonwealth Bank privatisation was popular with investors, despite the challenging economic conditions at the time.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIAN FOUNDATION INVESTMENT COMPANY LIMITED – ASX AFI, MORGANS FINANCIAL LIMITED, MONTGOMERY INVESTMENT MANAGEMENT PTY LTD, EVANS AND PARTNERS PTY LTD, LINCOLN INDICATORS PTY LTD, PYRAMID BUILDING SOCIETY

Central bank fears spook markets

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Original article by Jacob Greber, Sally Rose, Jessica Sier
The Australian Financial Review – Page: 1 & 6 : 12-Sep-16

Australia’s S&P/ASX 200 Index has shed 4.4 per cent since the start of August 2016, and a 2.5 per cent downturn in the S&P 500 is expected to push the local market lower on 12 September. The US market was sold down after a Federal Reserve official suggested that the strength of the US economy could warrant an interest rate cut in the near-term. This prompted renewed support for the US dollar and a sharp rise in bond yields. Meanwhile, Nick Bishop of Aberdeen Asset Management expects an upturn in global financial market volatility in the December quarter.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, STANDARD AND POOR’S 500 INDEX, UNITED STATES. FEDERAL RESERVE BOARD, ABERDEEN ASSET MANAGEMENT LIMITED, CITIGROUP PTY LTD, UBS GLOBAL ASSET MANAGEMENT (AUSTRALIA) LIMITED, EUROPEAN CENTRAL BANK, RESERVE BANK OF AUSTRALIA

Ombudsman wary of tribunal

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Original article by Sally Rose
The Australian Financial Review – Page: 21 : 9-Sep-16

The Financial Ombudsman Service’s chief ombudsman Shane Tregillis has spoken against a proposal to set up a new banking tribunal. He believes that such a tribunal would make the dispute resolution system more adversarial and legalistic. Tregillis has suggested that the proposal should be examined by the independent panel led by Ian Ramsay which will conduct a review of the financial services sector’s dispute resolution and complaints system.

CORPORATES
FINANCIAL OMBUDSMAN SERVICE LIMITED, CREDIT AND INVESTMENTS OMBUDSMAN, AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIA. SUPERANNUATION COMPLAINTS TRIBUNAL, FINANCIAL PLANNING ASSOCIATION OF AUSTRALIA LIMITED, AUSTRALIAN BANKERS’ ASSOCIATION

Supervision the best defence, urges RBA

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Original article by Michael Bennet
The Australian – Page: 19 & 23 : 9-Sep-16

Philip Lowe says that thorough supervision of banks is the best way to safeguard against a financial crisis, and he argues that regulatory reforms alone are insufficient. Lowe will shortly succeed Glenn Stevens as Reserve Bank of Australia governor. The banking sector has been subject to greater scrutiny by the Australian Prudential Regulation Authority in recent years, while they are expected to face further regulatory requirements when the so-called Basel IV reforms are finalised by the Basel Committee on Banking Supervision.

CORPORATES
RESERVE BANK OF AUSTRALIA, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, BANK FOR INTERNATIONAL SETTLEMENTS. BASEL COMMITTEE ON BANKING SUPERVISION, KPMG AUSTRALIA PTY LTD, GROUP OF TWENTY (G-20), UBS HOLDINGS PTY LTD, 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

Westpac refunds $20m over credit card transaction fees

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Original article by Clancy Yeates
The Age – Page: 21 : 9-Sep-16

Some 820,000 credit card customers of Westpac will be reimbursed after being charged foreign transaction fees on purchases via offshore merchants that were made in Australian dollars. The banking major has issued about $A20m worth of refunds after the Australian Securities & Investments Commission found that it had neglected to inform customers that such transactions would attract a so-called "foreign transaction fee". Westpac has also updated its terms and conditions.

CORPORATES
WESTPAC BANKING CORPORATION – ASX WBC, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

Shareholders to reap $24b in dividends

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Original article by Patrick Commins
The Australian Financial Review – Page: 31 : 9-Sep-16

CommSec’s Craig James estimates that shareholders of Australian-listed companies will receive $A16.3bn worth of dividend payments in the three weeks from mid-September 2016. The total payout in the wake of the August reporting season is expected to top $A24bn. Fortescue Metals Group is among the companies that have significantly increased their payout, although rivals BHP Billiton and Rio Tinto have slashed their dividends.

CORPORATES
COMMONWEALTH SECURITIES LIMITED, FORTESCUE METALS GROUP LIMITED – ASX FMG, BHP BILLITON LIMITED – ASX BHP, RIO TINTO LIMITED – ASX RIO, BT INVESTMENT MANAGEMENT LIMITED – ASX BTT

Zero rates eould smash the banks

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Original article by James Eyers
The Australian Financial Review – Page: 21 : 8-Sep-16

A decline in the cash rate to zero would have a negative impact on returns from Australian banking stocks. Credit Suisse analysts Jarrod Martin and James Ellis have calculated that such a scenario would trigger a fall in earnings of the major banks by an average of nine per cent or $A2.7 billion in total. Consequently, the banks would have to respond to a fall in return on equity by reducing their dividend payout ratios.

CORPORATES
CREDIT SUISSE (AUSTRALIA) LIMITED, RESERVE BANK OF AUSTRALIA, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, WESTPAC BANKING CORPORATION – ASX WBC, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ

Free kick for RBA’s new chief

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Original article by Michael Bennet
The Australian – Page: 19 & 27 : 7-Sep-16

Financial markets estimate that there is a 42 per cent chance that the Reserve Bank of Australia will reduce the cash rate by the end of 2016. The general consensus of economists is that rates will remain on hold until 2017, after the central bank opted against easing monetary policy on 6 September. Expectations of a strong rise in GDP growth in the June quarter will strengthen the case for leaving rates on hold. Philip Lowe will shortly succeed Glenn Stevens as Reserve Bank governor.

CORPORATES
RESERVE BANK OF AUSTRALIA, WESTPAC BANKING CORPORATION – ASX WBC, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, UBS HOLDINGS PTY LTD, CLSA AUSTRALIA PTY LTD, AUSTRALIA. DEPT OF THE TREASURY, STANDARD AND POOR’S ASX 200 INDEX, MORTGAGE CHOICE LIMITED – ASX MOC, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY

Insurance complaints spike

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Original article by Andrew White
The Australian – Page: 23 : 6-Sep-16

Australia’s Financial Ombudsman Service received 34,095 complaints from consumers in 2015-16, compared with 31,895 in 2014-15. There was a large rise in complaints about insurance products and services, which comprised 31 per cent of all complaints. The FOS resolved some 32,871 complaints during 2015-16, which is five per cent lower than previously, and this has been attributed to the rise in the number of grievances submitted to the agency.

CORPORATES
FINANCIAL OMBUDSMAN SERVICE LIMITEDAUSTRALIA. OFFICE OF THE AUSTRALIAN SMALL BUSINESS AND FAMILY ENTERPRISE OMBUDSMANAUSTRALIA. DEPT OF FINANCEAUSTRALIAN LABOR PARTY

Heady month ahead putting investors on watch for a fall

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Original article by Vanessa Desloires
The Australian Financial Review – Page: 26 : 6-Sep-16

Perpetual’s Matthew Sherwood says the Australian sharemarket could retreat in September 2016, noting that valuations and the outlook for earnings are high at present. The monetary policy meetings of central banks in the US, Japan and Europe will also be a focus for investors. Sharemarkets also often fall in September, as US traders return from the summer break. Michael Gable of Fairmont Equities says the S&P/ASX 200 could test the 5,200-point level in the near-term.

CORPORATES
PERPETUAL LIMITED – ASX PPTFAIRMONT EQUITIES PTY LTDSTANDARD AND POOR’S ASX 200 INDEXUNITED STATES. FEDERAL RESERVE BOARDEUROPEAN CENTRAL BANKBANK OF JAPANBHP BILLITON LIMITED – ASX BHPNATIONAL AUSTRALIA BANK LIMITED – ASX NABAUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZCOMMONWEALTH BANK OF AUSTRALIA – ASX CBAWESTPAC BANKING CORPORATION – ASX WBC