Westpac chief defends rate rise decision
By
BN
|
8/12/2009 7:30:00 AM
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5
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Westpac's chief executive broke her silence on the bank's dramatic rate rise yesterday, defending Westpac's decision to almost double the Reserve Bank of Australia's .25% increase to the official cash rate.
Gail Kelly told an investor and media update that the decision reflects the higher costs of funds which are about 10 times higher than pre-crisis levels.
Treasurer Wayne Swan angrily denounced the bank's rate increase last week warning the bank that there would be a consumer backlash.
However Kelly maintained yesterday that politicians "really do understand this new environment" and can "see the evidence before them that funding costs have materially gone up".
Kelly also vowed not to subsidise home loans at the expense of business customers.
Related stories:
Retail banking: Westpac replaces Hanlon - Less than a week since announcing Westpac's 45bps interest rate increase, Peter Hanlon has been replaced as head of the bank's retail and business banking business division.
Latest Comments
Total:
5
comment(s)
SunnyCoastBroker on
08 Dec 2009 10:00 AM
So now we''re seeing the impact of the big 4 reducing or cancelling a range of general banking fees over the last few months. Give with one hand, and snatch back with the other!!
Hell Toupe on
08 Dec 2009 05:51 PM
"..costs of funds...are about 10 times higher than pre-crisis levels." Hmmm. So if they were borrowing funds at 5% before, they''re now borrowing at 50%? I don''t think so.
brizbroker on
08 Dec 2009 07:24 PM
she means the costs has gone from BBSW plus 15bpts to BBSW plus 150bpts.
Martin J. Rollins ALMO Australia on
09 Dec 2009 01:19 PM
There is one reason why Gail raised rates... $400,000,000.
Real analysis of shareholder promises made by Kelly will reveal the real agenda behind her decision, basically Gail promised them a return next year... this is banking 101.
1. Forecast your future return dividends. (To shareholders
and yourself)
2. Get the team together to figure "How" to deliver.
3. Execute the strategy ( Charge current customers )
4. Deliver the $400m target. (and calcualte Kelly/Board
bonus)
5. Kelly (and board gang) get annual bonus.... voila!
The wiggles could have come up with something more creative.
richard on
09 Dec 2009 02:55 PM
Well done Westpac. 3 weeks before Christmas and piggy backing the RBA. What a PR stuff up.
I bet Gail toasted the RBA announcement with a 500 dollar bottle of champers. Probably her preferred drink these days. Bananas? She must think we are stupid.