K: Financial and Insurance Services

ASIC to sue big banks in weeks

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Original article by John Durie
The Australian – Page: 17 : 19-Aug-19

The Australian Securities & Investments Commission’s deputy chairman Daniel Crennan says it will shortly commence legal action against the four major banks, plus AMP and Macquarie Group. He adds that ASIC is still working on 13 matters that were referred to it by the Hayne royal commission, as well as a further 39 matters that were examined by the inquiry. Meanwhile, ASIC’s latest enforcement update shows that it accepted just one court-enforceable undertaking in the first half of 2019, compared with nine in the second half of 2018. ASIC’s reluctance to pursue litigation came under scrutiny by royal commissioner Kenneth Hayne.

CORPORATES
AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, AMP LIMITED – ASX AMP, MACQUARIE GROUP LIMITED – ASX MQG, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY

Exorbitant registry fees in ASIC’s sights

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Original article by Adam Creighton
The Australian – Page: 21 : 15-Aug-19

The Australian Competition & Consumer Commission is believed to be launching an investigation into the exit fees charged by share registry providers Computershare and Boardroom. This follows a complaint by fellow provider Automic, which stated to the ACCC in December that competition in the share registry sector was being stifled by the ‘exit fees’ that Computershare and Boardroom were charging clients who wanted to shift their business. A Computershare spokesperson has stated that it does not engage in anti-competitive practice.

CORPORATES
AUSTRALIAN COMPETITION AND CONSUMER COMMISSION, COMPUTERSHARE LIMITED – ASX CPU, BOARDROOM LIMITED, AUTOMIC

Banks rule OK on loan repayments as Westpac beats ASIC

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Original article by Andrew White
The Australian – Page: Online : 14-Aug-19

The Federal Court has dismissed claims by the Australian Securities & Investments Commission that Westpac had breached the responsible lending rules. ASIC’s case against Westpac had been closely observed by lenders, with the responsible lending rules being used by banks to determine a borrower’s ability to repay a loan. In rejecting ASIC’s case against Westpac, Justice Federal Court judge Nye Perram stated Westpac should not be automatically compelled to consider a borrower’s declared living expenses, and should be free to make use of spending benchmarks.

CORPORATES
FEDERAL COURT OF AUSTRALIA, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, WESTPAC BANKING CORPORATION – ASX WBC

Book of death bid to keep default life insurance

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Original article by John Kehoe
The Australian Financial Review – Page: 1 & 6 : 12-Aug-19

Parliament is due to vote on legislation in September that would see people under 25 and those with low account balances no longer automatically receive life insurance through their superannuation. It has been estimated the measure could reduce the premiums that life insurance companies receive by almost $3 billion. It is believed lobbyists for life insurer TAL have circulated a document featuring examples of dead and injured workers who have received insurance payouts but who would not have done so under the proposed changes. The document has been dubbed ‘the book of death’ by some MPs.

CORPORATES
TAL LIMITED

Investors query AMP turnaround

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Original article by James Frost
The Australian Financial Review – Page: 17 & 22 : 9-Aug-19

AMP has announced a loss of $2.3bn for the first half of 2019 and a new strategy to turn around its fortunes. Amongst other things, the wealth manager aims to reduce costs by about $300m a year. AMP has also flagged plans to significantly reduce the number of financial advisers in its network and place more emphasis on so-called roboadvice. AMP will also continue to pursue the sale of its life insurance business to Resolution Life, while it will issue new shares at $1.50 apiece via a $650m capital raising.

CORPORATES
AMP LIMITED – ASX AMP, RESOLUTION LIFE GROUP LIMITED, MERLON CAPITAL PARTNERS PTY LTD, ALLAN GRAY AUSTRALIA PTY LTD

Bond signal: ultra-low rates for a decade

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Original article by David Rogers
The Australian – Page: 17 & 26 : 9-Aug-19

The Reserve Bank of Australia is widely tipped to reduce the cash rate below 0.5 per cent within six months, and overnight indexed swaps pricing suggests that the cash rate will average 0.84 per cent over the next decade. David Plank of the ANZ Bank warns that the central bank will most likely need to adopt a quantitative easing policy within 5-10 years; he adds that this will probably not be necessary in the next year or so, unless there is a significant downturn in the global economy.

CORPORATES
RESERVE BANK OF AUSTRALIA, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, RBC CAPITAL MARKETS, EUROPEAN CENTRAL BANK, AUSTRALIA. HOUSE OF REPRESENTATIVES STANDING COMMITTEE ON ECONOMICS

Cheap money squeezes CBA

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Original article by James Eyers, Jonathan Shapiro
The Australian Financial Review – Page: 1 & 18 : 8-Aug-19

The Commonwealth Bank of Australia has posted a 2018-19 cash profit of $8.49bn, which is 4.7 per cent lower than previously; revenue was two per cent lower at $24.4bn. CEO Matt Comyn has warned that the bank’s net interest margin will fall by four basis points in 2019-20 due to the consecutive official interest rate cuts in June and July. He adds that there will be limited scope to pass on further rate cuts to customers, as many of its deposit rates are already close to zero. CBA’s cost-to-income ratio is currently 46.2 per cent, and Comyn says the aim is to reduce it to below 40 per cent over time.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, RESERVE BANK OF AUSTRALIA, JP MORGAN AUSTRALIA LIMITED, CITIGROUP PTY LTD, PM CAPITAL LIMITED, RESERVE BANK OF NEW ZEALAND

$47bn lost as currency war erupts

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Original article by David Rogers
The Australian – Page: 17 & 25 : 7-Aug-19

The Australian sharemarket has shed 5.4 per cent since reaching a record high in late July, as fears of a currency war add to tensions over the ongoing US-China trade war. However, Richard Coppleson of Bell Potter has downplayed concerns about the outlook for equities, saying a bear market is unlikely. He says there is not yet an all-out trade war, while interest rates are set to remain low. Shane Oliver of AMP Capital also does not expect a bear market, although he says shares are likely to fall further in the short-term.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, BELL POTTER SECURITIES LIMITED, AMP CAPITAL INVESTORS LIMITED, CITIGROUP PTY LTD, PEOPLE’S BANK OF CHINA, STANDARD AND POOR’S 500 INDEX, SHANGHAI COMPOSITE INDEX, HANG SENG INDEX, NIKKEI 225 INDEX, TAIEX INDEX, FTSE STRAITS TIMES INDEX, WESTPAC BANKING CORPORATION – ASX WBC, UNITED STATES. EXECUTIVE OFFICE OF THE PRESIDENT, UNITED STATES. DEPT OF COMMERCE, UNITED STATES. DEPT OF THE TREASURY, RESERVE BANK OF AUSTRALIA

Aussie 10-year bond yield drops below 1pc

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Original article by Patrick Commins, Vesna Poljak, Jonathan Shapiro
The Australian Financial Review – Page: 13 & 27 : 7-Aug-19

The fallout from the escalating trade and currency war between the US and China has seen the yield on Australian 10-year government bonds fall below the cash rate for the first time. The bond yield reached a record low of 0.968 per cent on 6 August, before rising to 1.047 per cent late in trading. Meanwhile, the futures market has priced in an 0.25 per cent reduction in the cash rate by October, after the Reserve Bank left official interest rates unchanged at one per cent at its monthly board meeting.

CORPORATES
RESERVE BANK OF AUSTRALIA, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, QIC LIMITED, ARDEA INVESTMENT MANAGEMENT PTY LTD, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, UNITED STATES. DEPT OF THE TREASURY, PEOPLE’S BANK OF CHINA, EXANTE DATA

Big four lending at record low as competition bites

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Original article by Duncan Hughes
The Australian Financial Review – Page: 3 : 6-Aug-19

Analysis by Morgan Stanley suggests that smaller Australian banks and non-authorised deposit-taking institutions are enjoying stronger growth in mortgage lending than the nation’s four largest banks. The ‘big four’ are attempting to counter this by offering incentives and aggressively reducing their interest rates, but some of the smaller lenders are matching these offers. Meanwhile, data from Australian Finance Group shows that the market share of non-bank lenders rose to a record 42 per cent in the June quarter.

CORPORATES
MORGAN STANLEY AUSTRALIA LIMITED, AUSTRALIAN FINANCE GROUP LIMITED – ASX AFG, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, WESTPAC BANKING CORPORATION – ASX WBC, ME BANK, BENDIGO BANK, CANSTAR PTY LTD, THINKTANK, THE BLACKSTONE GROUP LP, LA TROBE FINANCIAL PTY LTD