K: Financial and Insurance Services

Big banks to miss future facing mining boom

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Original article by Elouise Fowler
The Australian Financial Review – Page: 27 : 5-Apr-23

Tribeca Investment Partners portfolio manager John Stover says Australia’s major banks are not prepared for the new commodities boom that is being driven by critical minerals. The four major banks’ combined lending to the resources sector peaked at $64.7bn in 2015, but data from Bridgend Capital Advisory shows that this has since fallen by $25bn. Stover notes that many banks significantly reduced their mining and resources teams when the last commodities boom ended; this has left them with a dearth of skills, particularly with regard to commodities that will be vital to the transition to a low-carbon economy.

CORPORATES
TRIBECA INVESTMENT PARTNERS PTY LTD, BRIDGEND CAPITAL ADVISORY

Super tax may cost more than it raises

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Original article by Glenda Korporaal
The Australian – Page: 17 : 15-Mar-23

The SMSF Association will establish a working group of technical experts which will assess the federal government’s proposed changes to super tax concessions. CEO Peter Burgess says the proposed reforms could potentially prove to be as disastrous as the super surcharge regime, which cost more to implement and run than it raised in tax revenue. Burgess adds that the SMSFA is concerned that the proposed changes could have unintended consequences and could affect public confidence in super.

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SMSF ASSOCIATION

Two more rate hikes on the way, tips NAB chief

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Original article by Paul Garvey
The Australian – Page: 15 & 19 : 15-Mar-23

National Australia Bank CEO Ross McEwan says the collapse of Silicon Valley Bank will have little or no direct impact on NAB’s customers. However, he has acknowledged that the NAB Ventures unit has invested in five small fintech start-ups that have links to SVB. McEwan adds that the rapid demise of SVB underlines the value of Australia’s strong regulatory regime for the banking sector. Meanwhile, McEwan believes that SVB’s collapse will not deter the Reserve Bank from increasing official interest rates another two times in order to curb inflation. NAB still expects the cash rate to peak at 4.1 per cent.

CORPORATES
NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, SILICON VALLEY BANK, RESERVE BANK OF AUSTRALIA

RBA forecast to lift rate for 10th straight time

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Original article by Cecile Lefort
The Australian Financial Review – Page: 23 : 6-Mar-23

Futures pricing suggests that Australian equities will gain 0.9 per cent when the market opens on Monday. The local bourse is expected to be bolstered by a positive lead from Wall Street, which rallied in response to the latest US economic data. Meanwhile, financial markets have priced in a 96 per cent chance that the Reserve Bank of Australia will increase the cash rate by 25 basis points to 3.6 per cent on Tuesday. However, most economists now expect the cash rate to peak at 3.85 per cent in the June quarter.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, RESERVE BANK OF AUSTRALIA

Openpay not the last BNPL failure

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Original article by David Swan
The Australian – Page: 15 : 8-Feb-23

Splitit CEO Nandan Sheth warns that more ‘buy now, pay later’ providers are likely to collapse, after Openpay was placed in the hands of receivers from McGrathNicol. Sheth contends that Openpay’s business model was "fundamentally flawed", and he is not surprised about the company’s demise. He notes that many BNPL providers focus on subprime consumers who may not have credit; he adds that Splitit uses a customer’s existing credit from a credit card issuer, while it deals with merchants rather than consumers. Openpay has retrenched about 80 employees and shut down its platform, and McGrathNicol is seeking a buyer for the company.

CORPORATES
OPENPAY GROUP LIMITED – ASX OPY, McGRATH NICOL AND PARTNERS SERVICES PTY LTD, SPLITIT PAYMENTS LIMITED – ASX SPT

Openpay collapses, shuts down platform as shares suspended

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Original article by David Swan
The Australian – Page: 13 & 17 : 7-Feb-23

Barry Kogan, Jonathan Henry and Rob Smith from McGrathNicol have been appointed as receivers and managers of Openpay. The ‘buy now, pay later’ provider has advised that customers will now longer be able to use its platform to make new purchases, although they must pay all outstanding balances. Openpay listed on the Australian sharemarket in 2019 following an IPO that raised $50m. Josh Gilbert of trading platform eToro says the BNPL sector has gone from "hero to zero" among investors in recent months. Rival BNPL provider Laybuy recently announced that it will delist.

CORPORATES
OPENPAY GROUP LIMITED – ASX OPY, McGRATH NICOL AND PARTNERS SERVICES PTY LTD, ETORO, LAYBUY GROUP HOLDINGS LIMITED – ASX LBY

Tax the rich to pay for parental leave contributions: HESTA

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Original article by Lucy Dean, Tom McIlroy
The Australian Financial Review – Page: 6 : 1-Feb-23

Industry superannuation fund HESTA has used its pre-Budget submission to urge the federal government to cap super fund balances at $5m. CEO Debby Blakey notes that balances of around $5m receive about $70,000 worth of tax concessions annually, which is more than many of HESTA’s members earn in a year. HESTA has also called for the threshold at which high-income earners pay more tax on super to be lowered from $250,000 a year to $180,000; Blakey says this would allow more money to be directed to the Commonwealth Parental Leave Pay scheme. She contends that Australia’s superannuation system has a "persistent gender blind spot" that must be addressed. Some 80 per cent of HESTA’s members are women.

CORPORATES
HEALTH EMPLOYEES’ SUPERANNUATION TRUST AUSTRALIA LIMITED

Cost of living crisis drives vulnerable Australians to buy now, pay later schemes, consumer groups say

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Original article by Jordyn Beazley
The Guardian Australia – Page: Online : 25-Jan-23

‘Buy now, pay later’ providers are continuing to attract scrutiny, amid a growing push for greater regulation of the sector. The federal government outlined three potential options in late 2022 for regulating the sector, but consumer groups contend that regulating BNPL as traditional credit products is the only one of the options that would provide sufficient protection for consumers. Shungu Patsika from the National Debt helpline says the number of people with BNPL debts has risen significantly since Christmas; he notes that in the past it was mainly welfare recipients who contact the service for help, but a growing number of people with jobs are also doing so.

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S&P warns of climate credit risks

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Original article by David Ross
The Australian – Page: 15 : 18-Jan-23

S&P Global Ratings says the severity and frequency of bushfires and floods facing Australia is increasing. The firm has warned that the credit ratings of the nation’s banks, insurers, and state and local governments could potentially be downgraded if this trend continues. S&P Global Ratings adds that insurers face the greatest risk from weather-related events, given that they are set to experience two successive years of large losses.

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S&P GLOBAL RATINGS

Chalmers asks ACCC to probe deposit rates

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Original article by Ayesha de Kretser
The Australian Financial Review – Page: 12 & 15 : 11-Jan-23

Treasurer Jim Chalmers says consumers with savings accounts should consider switching banks to get a better deal, given that some banks still have low deposit interest rates despite eight increases in the cash rate during 2022. Chalmers contends that banks should treat their customers fairly with regard to savings accounts, and he has asked the Australian Competition & Consumer Commission to examine this issue in 2023. Analysis shows that smaller banks generally have much more competitive interest rates on deposit accounts than the nation’s four major banks.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIAN COMPETITION AND CONSUMER COMMISSION