Related News
Aussies keen to boost bank rivalry
By James Grubel |
December 13, 2010, Monday
|
Print Edition
Print Edition
AUSTRALIA'S government unveiled reforms to boost bank competition yesterday, allowing lenders to issue covered bonds for the first time and cracking down on interest rate signaling under a package designed to calm voter anger at rising mortgage interest rates.
Treasurer Wayne Swan said that dthe reforms aimed to help mutual credit unions and building societies become a fifth pillar of Australia's finance sector, by making it easier for customers to leave the big four banks which currently dominate the home loan market.
The reforms aim to help unlisted credit unions and building societies access funding and customers, but analysts say they are unlikely to seriously hurt the profitability and share values of the major banks.
"Most of what has been announced has been flagged or leaked. I don't think there is anything really new or earth-shattering here, so I don't see a huge reaction," said RBS bank analyst John Buonaccorsi.
"But certainly over time, it will lead to slightly cheaper housing loans, because covered bonds are cheaper funding. But it is not going to cause a dramatic difference."
Australia's four major banks, the Commonwealth Bank of Australia, National Australia Bank, Australia and New Zealand Banking Group and Westpac, currently control around 87 percent of the country's US$1.1 trillion home loan market.
Shares in the top four banks have slightly underperformed compared to the benchmark index since plans for the bank reforms were first mooted in November.
The Australian Bankers Association, which represents the major banks, said some of the reforms would increase competition, but warned some regulatory changes, such as scrapping loan exit fees, could hurt smaller lenders.
"Regulatory interventions may be politically popular but risk being counter-productive. Exit fees reflect legitimate costs of mortgages and banning them will hurt small lenders," the association's chief executive, Steven Munchenberg, said.
Swan said the government's injection of an extra A$4 billion (US$3.94 billion) in residential backed mortgage securities, a key source of funding to small lenders, would allow more "bullet bonds" for them, and would scrap mortgage exit fees charged by large banks.
He said the government would also increase the powers of the competition regulator to prosecute any collusion among banks through interest-rate price signalling, and will ask former Reserve Bank of Australia governor Bernie Fraser to examine whether it is possible to have portable bank account numbers.
"Vigorous competition is the best way to keep interest rates for borrowers lower over time and create a system that offers real choice," Swan said.
Swan unveiled the move to reform the sector in early November due to growing public anger at rising mortgage rates, with the main banks hiking rates over official central bank rate rises.
Treasurer Wayne Swan said that dthe reforms aimed to help mutual credit unions and building societies become a fifth pillar of Australia's finance sector, by making it easier for customers to leave the big four banks which currently dominate the home loan market.
The reforms aim to help unlisted credit unions and building societies access funding and customers, but analysts say they are unlikely to seriously hurt the profitability and share values of the major banks.
"Most of what has been announced has been flagged or leaked. I don't think there is anything really new or earth-shattering here, so I don't see a huge reaction," said RBS bank analyst John Buonaccorsi.
"But certainly over time, it will lead to slightly cheaper housing loans, because covered bonds are cheaper funding. But it is not going to cause a dramatic difference."
Australia's four major banks, the Commonwealth Bank of Australia, National Australia Bank, Australia and New Zealand Banking Group and Westpac, currently control around 87 percent of the country's US$1.1 trillion home loan market.
Shares in the top four banks have slightly underperformed compared to the benchmark index since plans for the bank reforms were first mooted in November.
The Australian Bankers Association, which represents the major banks, said some of the reforms would increase competition, but warned some regulatory changes, such as scrapping loan exit fees, could hurt smaller lenders.
"Regulatory interventions may be politically popular but risk being counter-productive. Exit fees reflect legitimate costs of mortgages and banning them will hurt small lenders," the association's chief executive, Steven Munchenberg, said.
Swan said the government's injection of an extra A$4 billion (US$3.94 billion) in residential backed mortgage securities, a key source of funding to small lenders, would allow more "bullet bonds" for them, and would scrap mortgage exit fees charged by large banks.
He said the government would also increase the powers of the competition regulator to prosecute any collusion among banks through interest-rate price signalling, and will ask former Reserve Bank of Australia governor Bernie Fraser to examine whether it is possible to have portable bank account numbers.
"Vigorous competition is the best way to keep interest rates for borrowers lower over time and create a system that offers real choice," Swan said.
Swan unveiled the move to reform the sector in early November due to growing public anger at rising mortgage rates, with the main banks hiking rates over official central bank rate rises.
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
