K: Financial and Insurance Services

Hacking risks higher under open banking

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Original article by James Eyers
The Australian Financial Review – Page: 19 : 24-Jan-19

The Australian Banking Association has expressed concern that theft of personal data and email scams will become rife under the federal government’s open banking regime. Open banking is slated to begin on 1 February 2020, with a pilot program to commence in July 2019. The ABA’s submission to the Treasury’s draft report on open banking has called for the terms of reference for the pilot program to include an assessment of the potential privacy risks.

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

Murray in the crosshairs as battered AMP faces shareholder revolt

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Original article by Joyce Moullakis, Ben Butler
The Australian – Page: 15 & 18 : 23-Jan-19

AMP could face a board spill at its 2019 annual meeting under the ‘two strikes’ regime, after more than 61 per cent of votes cast at the 2018 meeting rejected its remuneration report. The election of chairman David Murray is also uncertain, with at least two institutional investors said to be planning to vote against the resolution. They include Hamish Carlisle of Merlon Capital Partners, who opposes the election of Murray and non-executive director John O’Sullivan.

CORPORATES
AMP LIMITED – ASX AMP, MERLON CAPITAL PARTNERS PTY LTD, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY, RESOLUTION LIFE GROUP LIMITED, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, CREDIT SUISSE (AUSTRALIA) LIMITED, AUSTRALIAN COUNCIL OF SUPERANNUATION INVESTORS INCORPORATED, ABERDEEN ASSET MANAGEMENT LIMITED, IOOF HOLDINGS LIMITED – ASX IFL, AUSTRALIAN ETHICAL INVESTMENT LIMITED – ASX AEF, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, FEDERAL COURT OF AUSTRALIA

Industry funds the likely beneficiaries of proposed superannuation changes

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Original article by Roy Morgan
Market Research Update – Page: Online : 23-Jan-19

New findings from Roy Morgan show that the level of satisfaction with the financial performance of industry superannuation funds was 61.8% in the six months to November 2018, compared with 57.2% for retail super funds. Satisfaction with industry funds has increased by 2.6% over the last year, while satisfaction with retail funds has declined by 0.3%. Eight of the top 10 performing funds, based on satisfaction with financial performance, were industry funds over the six months to November. The highest rating was for Catholic Super with 70.5%, followed by Unisuper on 69.7%. The only retail funds to make it into the top 10 were ASGARD with 65.1% and Macquarie with 63.7% satisfaction, but both were below the average of 65.5% for the top 10. These are the latest findings from Roy Morgan’s ‘Satisfaction with Financial Performance of Superannuation in Australia Report’ November 2018, which is based on in-depth interviews conducted face-to-face with over 50,000 consumers per annum in their homes, including over 30,000 with superannuation.

CORPORATES
ROY MORGAN LIMITED, CATHOLIC SUPER, UNISUPER LIMITED, ASGARD SUPER, MACQUARIE SUPER

CBA dividend cut on the cards as sell-offs create an earnings hole

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Original article by Misa Han
The Australian Financial Review – Page: 21 : 22-Jan-19

Richard Wiles of Morgan Stanley suggests that the Commonwealth Bank of Australia may have to reduce its dividend payout ratio following a series of asset sales. CBA exited the life insurance sector in 2018 and secured a deal to sell Colonial First State Global Asset Management. It also proposed to spin-off its wealth management and mortgage broking operations. CBA paid a fully franked full-year dividend of $4.31 per share in fiscal 2018, an increase of $0.02.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, MORGAN STANLEY AUSTRALIA LIMITED, COLONIAL FIRST STATE GLOBAL ASSET MANAGEMENT, COLONIAL FIRST STATE GROUP LIMITED, COUNT FINANCIAL LIMITED, FINANCIAL WISDOM LIMITED, AUSSIE HOME LOANS LIMITED, COUNTPLUS LIMITED – ASX CUP, MORTGAGE CHOICE LIMITED – ASX MOC, SOCIETYONE AUSTRALIA PTY LTD

Funds end in the red after a horror year

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Original article by David Rogers
The Australian – Page: 15 & 22 : 18-Jan-19

Data from Mercer shows that long-only Australian share funds posted a median loss of 4.2 per cent in 2018, compared with a loss of 2.7 per cent for the S&P/ASX200 Accumulation Index. The December quarter was particularly challenging, with the median active Australian share fund losing 9.6 per cent before fees and the ASX200 Accumulation Index falling 8.1 per cent. Panther Trust Australian Shares, a boutique long-only fund, was the top performer in 2018 with a return of 5.6 per cent.

CORPORATES
MERCER INVESTMENTS PTY LTD, STANDARD AND POOR’S ASX 200 ACCUMULATION INDEX, STANDARD AND POOR’S ASX 200 INDEX, PANTHER TRUST AUSTRALIAN SHARES FUND, STANDARD AND POOR’S 500 INDEX, BENNELONG FUNDS MANAGEMENT PTY LTD, CSL LIMITED – ASX CSL, BHP GROUP LIMITED – ASX BHP, IDP EDUCATION LIMITED – ASX IEL, TELSTRA CORPORATION LIMITED – ASX TLS, AFTERPAY TOUCH GROUP LIMITED – ASX APT, RESOLUTE MINING LIMITED – ASX RSG, NEWS CORPORATION – ASX NWS, BANK OF QUEENSLAND LIMITED – ASX BOQ, ASALEO CARE LIMITED – ASX AHY, CALTEX AUSTRALIA LIMITED – ASX CTX, FLIGHT CENTRE TRAVEL GROUP LIMITED – ASX FLT, BELL ASSET MANAGEMENT LIMITED – ASX BLM, APPLE INCORPORATED, MASTERCARD INTERNATIONAL INCORPORATED, MICROSOFT CORPORATION, ALPHABET INCORPORATED

Hayne’s grenade about to explode

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Original article by Joyce Moullakis
The Australian – Page: 15 & 23 : 18-Jan-19

The banking royal commission is due to present its final report to the federal government on 1 February, although it may be a day or two before the report is made public. There are a number of companies within the financial services sector whose share price could be impacted by the report’s content and recommendations, including AMP, IOOF and Mortgage Choice. Treasurer Josh Frydenberg has hinted that the report will be released outside of stock exchange trading hours, while he says the commission’s initial report and hearings have shown that certain financial institutions have not done a good job when it comes to treating Australians honestly and fairly.

CORPORATES
AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY, AMP LIMITED – ASX AMP, IOOF HOLDINGS LIMITED – ASX IFL, MORTGAGE CHOICE LIMITED – ASX MOC, AUSTRALIA. DEPT OF THE TREASURY, WESTPAC BANKING CORPORATION – ASX WBC, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, AUSTRALIAN FINANCE GROUP LIMITED – ASX AFG, AUSTRALIAN LABOR PARTY, DEUTSCHE BANK AG, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, GREAT BRITAIN. FINANCIAL CONDUCT AUTHORITY

Looming federal election puts a dampener on dealmaking

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Original article by Scott Murdoch
The Australian – Page: 13 & 18 : 17-Jan-19

Data from Acuris shows that mergers and acquisitions activity in Australia totalled $US88.5bn ($123bn) in 2018, compared with $US85.6bn previously. Joe Fayyad from Bank of America Merrill Lynch notes that the upcoming federal election will affect inbound M&A activity in 2019, which will boost local companies’ ability to transact deals. Meanwhile, Aidan Allen of UBS expects M&A activity in 2019 to be dominated by private equity firms and Australian companies making offshore acquisitions.

CORPORATES
ACURIS, BANK OF AMERICA CORPORATION, MERRILL LYNCH AND COMPANY INCORPORATED, UBS HOLDINGS PTY LTD, MACQUARIE CAPITAL PTY LTD, JP MORGAN AUSTRALIA LIMITED, AMCOR LIMITED – ASX AMC, BEMIS MANUFACTURING COMPANY, REECE AUSTRALIA LIMITED – ASX REH, MORSCO, WORLEYPARSONS LIMITED – ASX WOR, JACOBS ENGINEERING GROUP INCORPORATED, GOLDMAN SACHS AUSTRALIA PTY LTD, CREDIT SUISSE (AUSTRALIA) LIMITED

Future Fund’s returns good, not great

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Original article by Joanna Mather
The Australian Financial Review – Page: 5 : 16-Jan-19

Data from Chant West shows that the federal government’s Future Fund achieved an average return of 10.7 per cent over the seven years to September. This is lower than the returns of major industry superannuation funds over the same period, including AustralianSuper, Hostplus and Cbus. Association of Superannuation Funds of Australia CEO Martin Fahy says the Future Fund would have lower costs and lower net returns if it were to be converted from a sovereign wealth fund into a super fund.

CORPORATES
AUSTRALIA. FUTURE FUND MANAGEMENT AGENCY, CHANT WEST FINANCIAL SERVICES PTY LTD, AUSTRALIANSUPER PTY LTD, HOST-PLUS, CONSTRUCTION AND BUILDING UNIONS’ SUPERANNUATION FUND, UNISUPER LIMITED, THE ASSOCIATION OF SUPERANNUATION FUNDS OF AUSTRALIA LIMITED, RICE WARNER ACTUARIES PTY LTD

Banks plan exit from uninvestible Britain

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Original article by Sarah Turner, Hans van Leeuwen, Lisa Murray
The Australian Financial Review – Page: 1 & 10 : 16-Jan-19

The Commonwealth Bank has confirmed that it will establish a subsidiary in Amsterdam in response to continuing uncertainty surrounding Britain’s departure from the European Union. Other Australian banks with a presence in the UK are also looking to set up subsidiaries in other European countries to ensure that they can keep operating in the region. Mark Tinkler of AXA Investment Managers says the UK is largely "uninvestible" until the Brexit uncertainty is resolved. The British parliament will shortly vote on the Brexit deal of Prime Minister Theresa May.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AXA INVESTMENT MANAGERS PTY LTD, GREAT BRITAIN. OFFICE OF THE PRIME MINISTER, WESTPAC BANKING CORPORATION – ASX WBC, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, ALPHINITY INVESTMENT MANAGEMENT PTY LTD, GRANT SAMUEL FUNDS MANAGEMENT PTY LTD, GERMANY. FEDERAL FINANCIAL SUPERVISORY AUTHORITY (BAFIN), BANK OF ENGLAND. PRUDENTIAL REGULATION AUTHORITY

Savers under pressure as banks keep lowering rates

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Original article by Duncan Hughes
The Australian Financial Review – Page: 5 : 15-Jan-19

Analysis by Canstar shows that the average interest rate for a 12-month term deposit of $50,000 is now 2.55 per cent. Likewise, the average online savings interest rate is now just 1.35 per cent, compared with a peak of 7.3 per cent in 2008. In contrast, the cash rate is 1.5 per cent and Australia’s inflation rate is 1.9 per cent. Professor Richard Holden from the University of New South Wales warns that low interest rates will encourage more savers to seek higher-risk investment options such as shares.

CORPORATES
CANSTAR PTY LTD, UNIVERSITY OF NEW SOUTH WALES, SEMAPHORE PRIVATE PTY LTD, RESERVE BANK OF AUSTRALIA, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, VIRGIN MONEY (AUSTRALIA) PTY LTD, BANK OF QUEENSLAND LIMITED – ASX BOQ