Aus­tralian top banks may gain from Swan’s re­forms

The Pak Banker - - Company& -

SYD­NEY: Wayne Swan, Aus­tralia's trea­surer, plans to ban exit fees on new home loans from July 2011 and em­power the Aus­tralian Com­pe­ti­tion & Con­sumer Com­mis­sion to pur­sue banks that sig­nal in­ter­est-rate changes to ri­vals.

Aus­tralia's four largest len­ders, led by Com­mon­wealth Bank of Aus­tralia and West­pac Bank­ing Corp., may emerge as vic­tors from Trea­surer Wayne Swan's pack­age to pro­mote bank­ing com­pe­ti­tion, an­a­lysts said.

Com­mon­wealth Bank, West­pac, Na­tional Aus­tralia Bank Ltd. and Aus­tralia & New Zealand Bank­ing Group Ltd. rose in Syd­ney trad­ing as Swan's 13-point plan stopped short of in­vestors' most pes­simistic ex­pec­ta­tions.

A pro­posal to let fi­nan­cialser­vices providers is­sue cov­ered bonds and broaden ac­cess to funds will help the top len­ders the most and makes them the "long-term win­ners" from the pack­age, ac­cord­ing to Credit Suisse AG.

"The trea­surer's bark was far worse than his bite," said Prasad Patkar, who helps man­age about $1.8 bil­lion at Platy­pus As­set Man­age­ment Ltd. in Syd­ney.

"The mea­sures will have no ad­verse im­pact on the ma­jor banks at all." Swan yes­ter­day an­nounced plans to help cus­tomers switch len­ders, strengthen Aus­tralia's smaller banks, and de­velop the do­mes­tic bond mar­ket to al­low banks to raise cheaper funds. The pack­age was a re­sponse to pub­lic anger at record prof­its from the biggest banks, which con­trol more than 80 per­cent of the home-loan mar­ket, and mort­gage-rate ad­vances that out­paced in­creases to bench­mark bor­row­ing costs at the cen­tral bank. Com­mon­wealth Bank, Aus­tralia's largest, added 1.2 per­cent to A$51.20 at the 4:10 p.m. lo­cal time close, trim­ming this year's de­cline to 6.7 per­cent. West­pac rose 1.5 per­cent to A$22.90, tak­ing the year's drop to 9.5 per­cent. Na­tional Aus­tralia Bank climbed 1.5 per­cent to A$24.57 and ANZ Bank gained 1.1 per­cent to A$24.10.

In a par­lia­ment where no party has an out­right ma­jor­ity, there's a "tan­gi­ble" risk some of the trea­surer's plans will fail, Credit Suisse an­a­lysts led by Jar­rod Martin in Syd­ney said in a note to clients dated to­day. Swan's mi­nor­ity La­bor govern­ment needs sup­port from other law­mak­ers in the lower house of par­lia­ment to pass leg­is­la­tion. -PB News

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