CEOs criticise levy, say shareholders and customers will bear cost
SYDNEY: The heads of Australia’s biggest lenders have slammed the government’s A$6.2 billion (RM19.9 billion) bank levy, saying the cost will be borne by shareholders and customers.
“This levy is a stealth tax” on Australians’ savings, said Westpac Banking Corp chief executive officer (CEO) Brian Hartzer in an emailed statement.
“There is no magic pudding. The cost of any new tax is ultimately borne by shareholders, borrowers, depositors and employees.”
His comments were echoed by National Australia Bank Ltd CEO Andrew Thorburn, who said the levy “will impact millions of everyday Australians who are employees, customers or shareholders of banks”.
“A tax cannot be absorbed. “This tax is borne by these people. It is not possible to impose a tax without an impact on people and, therefore, the wider community,” he said in a statement.
Commonwealth Bank of Australia CEO Ian Narev also criticised the government for not consulting the banks before announcing the plan, which he said lacked detail.
“Every extra cost needs to be borne by customers or shareholders, or a combination of both.”
Australia & New Zealand Banking Group Ltd said it was too early to estimate the financial impact of the levy.
The levy will reduce fiscal 2018 earnings at the five banks by four to five per cent, according to Morgan Stanley analysts.
The changes “are likely to have a negative impact upon profitability and the competitive position of the five largest banks”, Citigroup Inc (Citi) analysts led by Craig Williams wrote in a note to clients.
Citi reiterated its “sell” recommendation on Commonwealth Bank, Macquarie, National Australia and Westpac.
While the move will bring Australia into line with levies imposed in Europe, Hartzer said those were to recover the cost of government bailouts in the wake of the global financial crisis.
“No taxpayer funds have been used to prop up the Australian banks,” he said, adding that countries that imposed bank levies had much lower corporate tax rates than Australia.
The move from the traditionally business-friendly coalition aims to appeal to indebted voters’ anger at banks, which have failed to pass on interest-rate cuts in full even as they posted record profits. Bloomberg
Every extra cost needs to be borne by customers or shareholders, or a combination of both.