K: Financial and Insurance Services

Westpac refund costs approach $1 billion

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Original article by Lucas Baird, Aleks Vickovich
The Australian Financial Review – Page: 20 : 24-Oct-19

Westpac has advised that its financial accounts for the second half of 2018-19 will include an after-tax provision of $341m for its customer remediation program. This will lift the bank’s remediation costs for the full year to $958m, and $1.9bn on a pre-tax basis since 2017. Westpac has also flagged the potential for significant financial penalties as a result of Austrac’s investigation into its compliance with anti-money laundering laws. Westpac’s financial results for the year to 30 September will be released in early November.

CORPORATES
WESTPAC BANKING CORPORATION – ASX WBC, AUSTRALIA. ATTORNEY-GENERAL’S DEPT. AUSTRALIAN TRANSACTION REPORTS AND ANALYSIS CENTRE, EVANS AND PARTNERS ASIA FUND – ASX EAF, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ

Big banks chop 200 branches in cost-cutting drive

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Original article by Cliona O’Dowd
The Australian – Page: 21 : 24-Oct-19

Data from the Australian Prudential Regulation Authority shows that the nation’s four major banks closed 207 branches during 2018-19, and 750 since 2014. Westpac has closed 333 branches in the last five years, including those of its subsidiaries, ahead of ANZ Bank with 190. A Westpac spokesman has defended the closures, noting that less than two per cent of banking transactions are now undertaken in its branches. More than 1,000 ATMs nationwide have also been scrapped in the last year.

CORPORATES
AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, WESTPAC BANKING CORPORATION – ASX WBC, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, ST GEORGE BANK LIMITED, BANK OF MELBOURNE LIMITED, BANK OF SOUTH AUSTRALIA LIMITED, FINANCE SECTOR UNION

Global risks high, but Fed will avert recession

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Original article by David Rogers
The Australian – Page: 25 : 23-Oct-19

Northern Trust’s chief economist Carl Tannenbaum expects the US Federal Reserve to reduce official interest rates in late October. Financial markets anticipate more monetary policy easing, but Tannenbaum says the Federal Reserve will put further rate cuts on hold. He is also confident that interest rate cuts will enable the US economy from going into recession. Tannenbaum has also questioned whether the Australian government should still be focusing on returning the Budget to surplus in an environment of low interest rates and a slowing Chinese economy.

CORPORATES
NORTHERN TRUST CORPORATION, UNITED STATES. FEDERAL RESERVE BOARD, UNITED STATES. EXECUTIVE OFFICE OF THE PRESIDENT

Asset rule has banks with $13bn shortfall

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Original article by Richard Gluyas
The Australian – Page: 21 : 23-Oct-19

Macquarie’s Victor German expects the Reserve Bank of New Zealand to increase the tier-1 capital requirements for Australian banks’ NZ subsidiaries to 16 per cent, as it has previously flagged. German says Westpac, ANZ and National Australia Bank will be hardest hit by the move, estimating that their combined capital shortfall will be around $13bn. However, the Commonwealth Bank’s capital impost is likely to be smaller than Macquarie had previously expected, which could allow it to return up to $3.5bn to shareholders.

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

QE tipped as rate cuts lose impact

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Original article by David Rogers
The Australian – Page: 17 & 28 : 22-Oct-19

A number of economists now say the Reserve Bank of Australia could implement unconventional monetary policy measures in 2020. They include Westpac’s chief economist Bill Evans, who warns that quantitative easing may be necessary if the cash rate fall below 0.5 per cent. Michael Knox of Morgans Financial, Su-Lin Ong of RBC Capital Markets and Marcel Thieliant of Capital Economics have also flagged the prospect of quantitative easing. Financial markets have fully priced in a rate cut to 0.5 per cent by May.

CORPORATES
RESERVE BANK OF AUSTRALIA, WESTPAC BANKING CORPORATION – ASX WBC, MORGANS FINANCIAL LIMITED, RBC CAPITAL MARKETS, CAPITAL ECONOMICS LIMITED, GOLDMAN SACHS AUSTRALIA PTY LTD

NAB, ANZ face new climate activist vote

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Original article by Richard Gluyas
The Australian – Page: 19 : 21-Oct-19

Activist group Market Forces recently put forward shareholder resolutions calling on Westpac, the ANZ Bank and National Australia Bank to amend their constitutions in regard to reducing their exposure to fossil-fuel assets. A second activist group, the Australasian Centre for Corporate Responsibility, will table resolutions at the upcoming AGMs of NAB and ANZ, calling on them to withdraw from industry groups whose advocacy stances are at odds with the Paris climate goals. The ACCR states that its resolutions are conditional on shareholders approving the Market Forces resolutions.

CORPORATES
WESTPAC BANKING CORPORATION – ASX WBC, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, MARKET FORCES, AUSTRALASIAN CENTRE FOR CORPORATE RESPONSIBILITY, BHP GROUP LIMITED – ASX BHP

IOOF to push ahead with buyout of ANZ’s wealth arm

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Original article by Andrew White
The Australian – Page: 21 : 18-Oct-19

Shares in wealth manager IOOF Holdings rallied on 17 October after it moved a step closer to completing a deal to acquire the ANZ Bank’s OnePath pensions and investments division. IOOF has advised that it will pay just $850m for the business if it gains regulatory approval by 30 June. This represents a 13 per cent discount to the previously agreed purchase price. Meanwhile, the Australian Prudential Regulation Authority has indicated that it will not appeal a recent Federal Court decision that cleared five IOOF executives and directors of misconduct.

CORPORATES
IOOF HOLDINGS LIMITED – ASX IFL, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, ONEPATH AUSTRALIA LIMITED, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, FEDERAL COURT OF AUSTRALIA

Strong gains raise question of fair stock value

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Original article by David Rogers
The Australian – Page: 27 : 18-Oct-19

The Australian sharemarket’s pullback on 17 October was to be expected, after the S&P/ASX 200 had gained 3.8 per cent in two weeks. The market may be vulnerable to a further pullback, given that it now looks to be the most expensive since October 2007 on a price-earnings basis. Meanwhile, financial markets have downgraded the chances of an official interest rate cut in both November and December following the release of the latest unemployment data.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, RESERVE BANK OF AUSTRALIA, MACQUARIE GROUP LIMITED – ASX MQG

Comyn claims ACCC exaggeration but welcomes probe

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Original article by Bo Seo
The Australian Financial Review – Page: 12 & 17 : 17-Oct-19

Commonwealth Bank of Australia CEO Matt Comyn and chair Catherine Livingstone are supportive of a new inquiry into mortgage pricing. However, Comyn has questioned the Australian Competition & Consumer Commission’s claim that the pricing gap for new and existing customers of the nation’s major banks is 32 basis points. He says this gap is significantly lower than 30 basis points at CBA. Livingstone notes that the bank takes into account the interests of borrowers, deposit-holders and shareholders when deciding upon its mortgage pricing.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIAN COMPETITION AND CONSUMER COMMISSION, WESTPAC BANKING CORPORATION – ASX WBC, AUSTRALIA. DEPT OF THE TREASURY

Bank trusted more than tech: ANZ

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Original article by Supratim Adhikari
The Australian – Page: 21 : 17-Oct-19

ANZ Bank’s CEO Shayne Elliott says consumers still generally trust banks more than technology companies such as Google and Facebook. He adds that consumers trust banks to manage their personal data as well as their money, which gives banks an advantage over tech companies. He has also defended the banking sector’s traditional one-size-fits-all model for product pricing, arguing that the targeted pricing strategy of fintechs has its risks.

CORPORATES
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, GOOGLE INCORPORATED, FACEBOOK INCORPORATED