K: Financial and Insurance Services

RBA flags another rate cut if jobs market deteriorates

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Original article by David Rogers
The Australian – Page: 2 : 17-Jul-19

The Reserve Bank of Australia indicated in the minutes of its monthly board meeting that there is likely to be spare capacity in the labour market for some time, while jobs growth is likely to ‘moderate’. Labour market data for June will be released on 18 July, and the official unemployment rate is expected to be steady at 5.2 per cent. The employment and inflation outlook is likely to influence the timing of further interest rate cuts; some economists say the RBA may wait to gauge the impact of the cuts in June and July before further easing monetary policy.

CORPORATES
RESERVE BANK OF AUSTRALIA, WESTPAC BANKING CORPORATION – ASX WBC, UBS HOLDINGS PTY LTD

AMP rattled as $3.3bn sale breaks down

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Original article by Cliona O’Dowd, Joyce Moullakis
The Australian – Page: 17 & 20 : 16-Jul-19

Shares in AMP closed 15.81 per cent lower at $1.81 on 15 July after the Reserve Bank of New Zealand thwarted the proposed sale of its life insurance division. The central bank said it would not support the sale of AMP Life NZ to the UK-based Resolution Life unless the assets underpinning New Zealanders’ policies are ‘ring-fenced’. AMP still hopes to secure a deal, but analysts say any sale now is likely to be at a much lower price than the $3.3bn that Resolution Life had agreed to pay. AMP has also advised that investors will not receive an interim dividend, citing uncertainty regarding the sale of AMP Life.

CORPORATES
AMP LIMITED – ASX AMP, AMP LIFE LIMITED, RESOLUTION LIFE GROUP LIMITED, RESERVE BANK OF NEW ZEALAND, ALLAN GRAY AUSTRALIA PTY LTD, MORNINGSTAR PTY LTD, REGAL FUNDS MANAGEMENT PTY LTD, SHAW AND PARTNERS LIMITED, MACQUARIE GROUP LIMITED – ASX MQG

ANZ the first bank to loosen lending criteria

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Original article by Eric Johnston
The Australian – Page: 19 : 15-Jul-19

The ANZ Bank has advised that its ‘floor rate’ for home loan customers will be reduced from 7.25 per cent to 5.5 per cent in response to the Australian Prudential Regulation Authority’s recent reforms. ANZ will also increase its sensitivity margin to 2.5 per cent. Rival banks are expected to quickly follow ANZ in reducing their floor rates, which are used to assess a borrower’s ability to repay a loan.

CORPORATES
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, MORGAN STANLEY AUSTRALIA LIMITED

RBA could weigh cheap cash to banks if rates fall: analysts

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Original article by Jonathan Shapiro
The Australian Financial Review – Page: 17 : 15-Jul-19

Observers expect the Reserve Bank of Australia to cut the cash rate again by the end of 2019. However, analysts estimate that bank earnings would be reduced by seven per cent if they were to pass on the next interest rate cut in full, meaning only a partial cut in mortgage rates is likely. Credit Suisse has suggested that the RBA might offer cheap funding to banks that offer to pass on the next rate cut in full under a scheme similar to that adopted by the Bank of England after it cut interest rates following the Brexit vote in 2016.

CORPORATES
RESERVE BANK OF AUSTRALIA, CREDIT SUISSE (AUSTRALIA) LIMITED, BANK OF ENGLAND, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB

Housing loan growth at decade low as squeeze hits

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Original article by Nick Lenaghan
The Australian Financial Review – Page: 7 : 12-Jul-19

Data from the Australian Bureau of Statistics shows that housing finance approvals declined by 2.4 per cent in May 2019 and 20.9 per cent in the year to May. Lending to owner occupiers was down 2.7 per cent in May and 18 per cent over the year, while lending to investors fell by 1.7 per cent and 27.8 per cent respectively. However, the monthly figures also show that there was 0.8 per cent growth in housing finance for owner-occupiers who were buying their first home.

CORPORATES
AUSTRALIAN BUREAU OF STATISTICS, DOMAIN HOLDINGS AUSTRALIA LIMITED – ASX DHA, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, UBS HOLDINGS PTY LTD, AUSTRALIAN LABOR PARTY, WESTPAC BANKING CORPORATION – ASX WBC, COUNCIL OF FINANCIAL REGULATORS

Fed chair prepares ground for July rate cut

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Original article by Nick Timiraos
The Australian – Page: 27 : 12-Jul-19

Wall Street and the yield on 10-year US government bonds rose on 11 July after Federal Reserve chairman Jerome Powell indicated that the cash rate is likely to be reduced at the end of the month. Powell has told the US Congress that trade tensions and concerns about the global economy continue to weigh on the US economic outlook, while the inflation rate may remain weak for some time. Financial markets have priced in a rate of at least 25 basis points when the central bank meets on 30-31 July.

CORPORATES
UNITED STATES. FEDERAL RESERVE BOARD

Culture to cost big three banks $500m

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Original article by James Fernyhough, James Thomson
The Australian Financial Review – Page: 1 & 21 : 12-Jul-19

The Australian Prudential Regulation Authority has imposed additional capital requirements on Westpac, the ANZ Bank and National Australia Bank following its review of their culture, governance and accountability self-assessments. They will have to set aside an extra $500m of capital until their customer remediation programs are completed and they have addressed all of the issues that emerged in their self-assessments. The increased capital requirements will have a slight impact on the three banks’ common equity tier 1 capital ratios.

CORPORATES
WESTPAC BANKING CORPORATION – ASX WBC, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY

Australian workers not saving enough to handle a job loss

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Original article by Killian Plastow
The New Daily – Page: Online : 11-Jul-19

Research by Finder shows that 5.9 million Australian workers have insufficient savings to support themselves for more than a month if they lost their job. The survey also found that 2.1 million Australians would be unable to financially support themselves for more than a week. Separate research by Roy Morgan shows that Australians have an average of six months’ worth of savings, although the median is about 0.8 months, or 24 days. CEO Michele Levine says people on low incomes would be hardest hit by a sudden job loss, as they are less likely to have savings.

CORPORATES
FINDER.COM.AU, ROY MORGAN LIMITED, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

Fels laments lack of bank competition

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Original article by Adam Creighton
The Australian – Page: 2 : 11-Jul-19

Former Australian Competition & Consumer Commission chairman Allan Fels has expressed concern about the four major banks’ domination of the nation’s home loans market. He says competition in Australia’s banking sector has declined substantially since the global financial crisis. He also notes that there is now very little difference between the "big four" banks and that it is relatively easy for them to co-ordinate their actions without breaching cartel laws.

CORPORATES
AUSTRALIAN COMPETITION AND CONSUMER COMMISSION, RESERVE BANK OF AUSTRALIA, ST GEORGE BANK LIMITED, BANKWEST, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY

S&P upgrades outlook for big four banks

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Original article by Tim Boyd
The Australian Financial Review – Page: 19 : 11-Jul-19

The Australian Prudential Regulation Authority’s move to scale back its capital requirements for the banking sector has prompted S&P Global Ratings to upgrade its outlook for the nation’s four major banks from ‘negative’ to ‘stable’. The credit ratings agency has also upgraded Macquarie Bank’s outlook from ‘developing’ to ‘positive’. Meanwhile, S&P has indicated that a sharp correction in residential property prices is the biggest risk factor for Australian banks.

CORPORATES
S&P GLOBAL RATINGS, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, MACQUARIE BANK LIMITED – ASX MBL, BELL POTTER SECURITIES LIMITED