BANKS AND BANKING – AUSTRALIA – REGULATION

‘Heretic’ flags break-up of Australia’s big four banks

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Original article by Clancy Yeates
The Australian Financial Review – Page: 13 & 17 : 19-Sep-14

Investment banker Alastair Walton has warned that Australia’s four major banks will be vulnerable in the event of another financial crisis. He says that rather than imposing stricter capital requirements, it may be better to look at forcing the "AA-"-rated banks to demerge and be broken up into 8-10 smaller banks with "A" credit ratings. The BKK Partners chairman notes that the four major banks rate among the 20 biggest in the world

CORPORATES
BKK PARTNERS PTY LTD, GOLDMAN SACHS AUSTRALIA PTY LTD, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, WESTPAC BANKING CORPORATION – ASX WBC, ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT, AUSTRALIAN NATIONAL UNIVERSITY, AUSTRALIA. COUNCIL OF FINANCIAL REGULATORS, RESERVE BANK OF AUSTRALIA, AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, AUSTRALIAN COMPETITION AND CONSUMER COMMISSION, AUSTRALIAN BANKERS’ ASSOCIATION

Banks set to dodge ‘bail-in’ measures

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Original article by Clancy Yeates, Jonathan Shapiro
The Australian Financial Review – Page: 24 : 18-Sep-14

The Australian Government is likely to reject a "bail-in" regime for large banks. The proposed rule for the largest 29 banks would bail in some bondholders if a bank collapsed, rather than using taxpayer funds. Australian Prudential Regulation Authority Wayne Byres said that there were practical difficulties in introducing a bail-in regime. Moody’s Investors Service said that the regime could reduce access to funding. However, Australia’s membership of the Financial Stability Board may force it to accept the regime

CORPORATES
AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, MOODY’S INVESTORS SERVICE INCORPORATED, FINANCIAL STABILITY BOARD, GROUP OF TWENTY (G-20), COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB

BCA cautions against hasty bank reforms

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Original article by Annabel Hepworth
The Australian – Page: 19 : 9-Sep-14

The Business Council of Australia (BCA) has lodged its submission for the second round of the Federal Government’s new financial system review, conducted by ex-Commonwealth Bank of Australia CEO David Murray. The BCA argues against more stringent capital requirements for large banks, as this could have a knock-on effect on all enterprises via higher borrowing costs. The issue of how to handle banks deemed "too big to fail" will also be discussed at the upcoming Group of 20 summit in Australia

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, BUSINESS COUNCIL OF AUSTRALIA, GROUP OF TWENTY (G-20), MOODY’S INVESTORS SERVICE INCORPORATED

Murray review could lift costs

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Original article by Kylar Loussikian
The Australian – Page: 18 : 4-Sep-14

JPMorgan banking analyst Scott Manning warns that wholesale funding costs in the banking sector may rise some $A2.2bn, if recommendations likely to be made by the Australian Government’s new financial system review are adopted. A major issue is potentially more stringent capital requirements to fund home mortgage lending. Interest rate discounts on such loans offered by the main banks have grown to between 1% and 1.4% from 0.2% in 2009

CORPORATES
RESERVE BANK OF AUSTRALIA, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, JP MORGAN AUSTRALIA LIMITED

APRA hints at shifting capital

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Original article by Michael Bennet
The Australian – Page: 16 : 1-Sep-14

The Australian Prudential Regulation Authority has lodged its submission to the Federal Government’s financial system review. The watchdog wants global rules for the banking sector that require greater capital reserves for mortgage lending to apply locally. It is also sharing concerns of the Reserve Bank of Australia that more liberal lending standards could create unsustainable prices in the residential real estate market. Banks using advanced systems can access public guarantees at a lower cost

CORPORATES
BENDIGO AND ADELAIDE BANK LIMITED – ASX BEN, MACQUARIE BANK LIMITED – ASX MBL, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, RESERVE BANK OF AUSTRALIA, DEUTSCHE BANK AG

Murray focus ‘on capital reserve requirements’

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Original article by Michael Bennet
The Australian – Page: 19 : 29-Aug-14

Smaller regional banks have in their submissions to the Australian Government’s new financial system review called for less onerous rules on the capital requirements to back mortgage loans. At the same time the four major banks have argued against any increase to the levels that apply to them. However the latter is believed to be the more likely recommendation by the review, as the Reserve Bank of Australia is wary of further strong growth in an already booming residential real estate market

CORPORATES
RESERVE BANK OF AUSTRALIA, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, MACQUARIE GROUP LIMITED – ASX MQG, DEUTSCHE BANK AG, MERRILL LYNCH (AUSTRALIA) PTY LTD

Reserve Bank takes aim at mortgages

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Original article by Michael Bennet
The Australian – Page: 17 : 28-Aug-14

The four major as well as smaller regional banks have lodged their submissions for the second round of the Australian Government’s financial system review. The main lenders are arguing against stricter capital requirement rules, while the minor banks want access to public guarantees on the same favourable terms enjoyed by their competitors. However both lobbying efforts have now been criticised by the Reserve Bank of Australia. It is concerned about any moves that would lead to even greater mortgage lending, as consumers may default when interest rates rise again

CORPORATES
RESERVE BANK OF AUSTRALIA, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIAN BANKERS’ ASSOCIATION, BBY LIMITED, PRICEWATERHOUSECOOPERS, BANK FOR INTERNATIONAL SETTLEMENTS. BASEL COMMITTEE ON BANKING SUPERVISION, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ

Murray wants banks to prepare for market correction

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Original article by James Eyers, Jacob Greber
The Australian Financial Review – Page: 1 & 6 : 22-Aug-14

The chairman of the financial system inquiry, David Murray, notes that Australia was largely unaffected by the global financial crisis. However, he warns that the domestic banking sector must take action to be ready for an eventual correction in asset prices, which have been boosted by stimulus measures in the wake of the crisis. Murray has previously noted that it could be necessary for banks to increase their capital reserves

CORPORATES
AUSTRALIAN BANKERS’ ASSOCIATION, RESERVE BANK OF AUSTRALIA

Little joy for big four in Moody’s assessment

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Original article by Michael Bennet
The Australian – Page: 19 : 5-Aug-14

Credit ratings agency Moody’s Investors Service has commented on the findings of the Australian Government’s financial system inquiry. Its chair, David Murray, had rejected claims by the four main banks that they were facing an unduly harsh regulatory burden in the local roll-out of the Basel III reforms for the sector. Banks with domestic systemic importance, or those deemed "too big to fail", must increase their tier-one capital ratios. However Moody’s notes that its data show banks of a similar size overseas are no better off, and worse in the UK and Canada

CORPORATES
MOODY’S INVESTORS SERVICE INCORPORATED, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, BANK FOR INTERNATIONAL SETTLEMENTS. BASEL COMMITTEE ON BANKING SUPERVISION, UBS HOLDINGS PTY LTD

Banks may have to spin off trading

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Original article by John Kehoe, Jonathan Shapiro
The Australian Financial Review – Page: 1 & 10 : 4-Aug-14

Opinion is divided about the merits of restructuring banks to separate their retail and commercial banking arms from divisions such as insurance and funds management. David Murray, who is chairing the Australian Government’s inquiry into the financial system, has suggested that so-called "ring-fencing" should be examined in order to protect banks that are deemed "too big to fail". Similar laws have been introduced in the US and the UK, but Australian Bankers’ Association CEO Steve Munchenberg questions whether such reforms are needed in Australia

CORPORATES
AUSTRALIAN BANKERS’ ASSOCIATION, PRICEWATERHOUSECOOPERS AUSTRALIA (INTERNATIONAL) PTY LTD, GREAT BRITAIN. DEPT OF THE TREASURY, JP MORGAN AND COMPANY INCORPORATED, AUSTRALIA. DEPT OF THE TREASURY, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIA. FUTURE FUND MANAGEMENT AGENCY, BANK FOR INTERNATIONAL SETTLEMENTS. BASEL COMMITTEE ON BANKING SUPERVISION, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, UNITED STATES. FEDERAL RESERVE BOARD, MACQUARIE GROUP LIMITED – ASX MQG, SUNCORP GROUP LIMITED – ASX SUN, MOODY’S INVESTORS SERVICE INCORPORATED