Banks to pass on impost

SOMERSET College student Jordan Murdock is one appy budding entrepreneur.

His team took out the top prize at the weekend’s Startup Weekend Gold Coast with an idea for an app similar to Google Maps – but for waterways.

Organised by Bond University and Study Gold Coast, bank,” NAB chief executive Andrew Thorburn said. “It is a tax on every Australian who benefits from, and is part of, our industry.”

Mr Thorburn said that includes NAB’s shareholders, staff and 10 million customers – who, like those of all big four banks, have already borne the cost of additional regulation through higher rates on home loans.

“It is not possible to impose a tax without an impact on people,” he said.

Westpac’s Brian Hartzer called the levy a “stealth tax” on an industry that already paid more tax than any other.

“There is no ‘magic pudding’,” Mr Hartzer said.

“The cost of any new tax is ultimately borne by shareholders, borrowers, depositors and employees.”

Mr Morrison’s budget slugged the big four plus Macquarie Group with a 0.06 per cent levy on their liabilities – which includes borrowings and deposits – starting from July 1 to raise $6.2 billion over four years. The treasurer called the measure a “fair contribution” that would help competition and budget repair.

In his budget night speech he said it was “specifically not” a levy on ordinary bank customer deposit and mortgage accounts.

CBA’s Ian Narev, however, said: “Every extra cost needs to be borne by customers or shareholders, or a combination of both”. He echoed Australian Bankers’ Association chief executive Anna Bligh’s point that the move had been undertaken without consultation.

ANZ made no criticism of the “bank tax” but said it was too early to provide “a definitive estimate of the financial impact”.

Macquarie Group, in a statement, also said the impact on its operations was unclear.

Deutsche analyst Andrew Triggs said the levy looked “unusually harsh” and could reduce cash profit at the majors by between three and six per cent.

“While such a levy has been put in place in other countries such as the UK, typically this was in the years soon after the financial crisis and in countries which required bank sector recapitalisations,” he said.

Patersons economic strategist Tony Farnham said the levy, forecast to deliver $1.6 billion in revenue in its first year, could push dividends lower.

Banks may also quickly raise loan rates to offset the expense, he said. NAB chief economist Alan Oster said it was unclear how ratings agencies, which affect how cheaply and easily banks can raise funds, will view the levy.