Banks struggle despite RBNZ retreat: analysts

Original article by Cliona O’Dowd
The Australian – Page: 20 : 9-Dec-19

Jonathan Mott of UBS says the outlook for Australia’s banks remains "very challenging", despite the fact that they will be treated more favourably than expected under the Reserve Bank of New Zealand’s new capital requirements. The central bank will phase in the new capital rules over a longer time-frame, while the banks will able to hold a wider range of securities as tier-one capital. Several analysts expect the new capital rules to result in the banks receiving lower dividend payouts from their New Zealand subsidiaries.

CORPORATES
RESERVE BANK OF NEW ZEALAND, UBS HOLDINGS PTY LTD, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, WESTPAC BANKING CORPORATION – ASX WBC, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, CITIGROUP PTY LTD, MORGAN STANLEY AUSTRALIA LIMITED

Banks boosted as Kiwis cave in

Original article by Richard Gluyas
The Australian – Page: 17 & 21 : 6-Dec-19

The Reserve Bank of New Zealand will require the local subsidiaries of Australia’s four major banks to hold tier one capital that is equivalent to at least 16 per cent of their risk-weighted assets. They will also be required to hold total capital of 18 per cent, of which 13.5 per cent will have to be common equity tier one capital. However, the new rules will be implemented over a seven-year period, rather than the five-year time-frame that was initially proposed.

CORPORATES
RESERVE BANK OF NEW ZEALAND, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, WESTPAC BANKING CORPORATION – ASX WBC, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, UBS HOLDINGS PTY LTD, S&P GLOBAL RATINGS

Banks braced for RBNZ’s capital D-Day

Original article by James Eyers
The Australian Financial Review – Page: 13 & 16 : 5-Dec-19

The Reserve Bank of New Zealand will announce its new tier-1 capital requirements for Australian banks’ NZ subsidiaries on 5 December. Cameron Bagrie from Bagrie Economics expects the central bank to push ahead with its previously flagged plan to increase minimum capital ratios to 16 per cent, despite warnings from banks that this is excessive. It is estimated that Australian banks would need to hold about $18bn worth of additional capital in New Zealand, which may reduce both their profits and dividends in Australia.

CORPORATES
RESERVE BANK OF NEW ZEALAND, BAGRIE ECONOMICS, EVANS AND PARTNERS PTY LTD, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, NEW ZEALAND BANKERS’ ASSOCIATION

Asset rule has banks with $13bn shortfall

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

APRA urges more capital be held against NZ banks

Original article by James Eyers
The Australian Financial Review – Page: 11 & 17 : 16-Oct-19

The Australian Prudential Regulation Authority has warned that the nation’s major banks may need to increase the amount of capital they hold domestically in response to proposed changes to capital requirements in New Zealand. APRA is concerned that the Reserve Bank of NZ’s reforms may prompt banks to shift capital to NZ, where they are the dominant players in the banking sector. The ANZ Bank estimates that APRA’s proposal would reduce its common equity tier 1 capital by about 75 basis points; Westpac in turn says its tier 1 capital would be reduced by about 40 basis points.

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

Westpac dividend under pressure

Original article by James Eyers
The Australian Financial Review – Page: 17 : 23-Sep-19

There is growing speculation that Westpac could reduce its dividend payout in response to the Reserve Bank of New Zealand’s new capital requirements. Westpac has yet to determine the size of its final dividend for 2018-19, but Credit Suisse has forecast both a lower payout and a capital raising of at least $1.5bn when Westpac releases its full-year results in early November. The prospect of further official interest rate cuts in Australia is also weighing on the earnings of the nation’s banks.

CORPORATES
WESTPAC BANKING CORPORATION – ASX WBC, RESERVE BANK OF NEW ZEALAND, CREDIT SUISSE (AUSTRALIA) LIMITED, CITIGROUP PTY LTD, RESERVE BANK OF AUSTRALIA, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, EVANS AND PARTNERS ASIA FUND – ASX EAF, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, PM CAPITAL LIMITED

Kiwi cut raises the prospect of negative interest rates

Original article by Adam Creighton
The Australian – Page: 4 : 8-Aug-19

The Australian dollar reached a 10-year low of $US0.6680 in local trading on 7 August, after the Reserve Bank of New Zealand reduced official interest rates by 50 basis points to 1 per cent. Central bank governor Adrian Orr has not ruled out the prospect of negative interest rates or measures such as quantitative easing. The RBNZ’s move is likely to strengthen the case for further monetary policy easing in Australia before the end of 2019.

CORPORATES
RESERVE BANK OF NEW ZEALAND, RESERVE BANK OF AUSTRALIA, BLOOMBERG LP, STANDARD AND POOR’S ASX 200 INDEX, JP MORGAN AUSTRALIA LIMITED, HSBC AUSTRALIA HOLDINGS PTY LTD, UNITED STATES. FEDERAL RESERVE BOARD, AUSTRALIA. DEPT OF THE TREASURY

AMP rattled as $3.3bn sale breaks down

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

RBNZ orders independent reviews of ANZ

Original article by Joyce Moullakis
The Australian – Page: 21 : 25-Jun-19

The Reserve Bank of New Zealand has commissioned reviews of the ANZ Bank’s compliance with capital requirements and governance standards. The independent reviews follow the recent departure of the bank’s New Zealand CEO David Hisco after a review of his personal expense claims. Meanwhile, Mark Nathan of Regal Funds Management expects the central bank to make changes to its proposed overhaul of Australian banks’ capital requirements in response to feedback from the industry.

CORPORATES
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, ANZ NATIONAL BANK LIMITED, RESERVE BANK OF NEW ZEALAND, REGAL FUNDS MANAGEMENT PTY LTD, NEW ZEALAND. FINANCIAL MARKETS AUTHORITY

Banks bluffing on NZ lending threats: former PM

Original article by James Eyers
The Australian Financial Review – Page: 17 & 20 : 24-May-19

Former New Zealand prime minister Bill English has concerns about the Reserve Bank of NZ’s plans to require the local subsidiaries of Australia’s big four banks to increase their capital levels. S&P Global Ratings has estimated that the banks would need to raise an additional $8.1 billion, given that Australia’s four major banks have an 86 per cent share of the NZ lending market. English is worried that the move will make the banks more complacent about risk management, although he doubts that they will go ahead with threats to reduce lending in New Zealand.

CORPORATES
RESERVE BANK OF NEW ZEALAND, S&P GLOBAL RATINGS, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, STOCKBROKERS AND FINANCIAL ADVISERS ASSOCIATION LIMITED, AUSTRALIAN LABOR PARTY