Second-tier lenders wary of guarantee change
By
Tim Neary
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3/02/2010 12:00:00 AM
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3
comments
The removal of the government guarantee on wholesale funding could trigger a new phase of competitive disparities in the banking sector, punishing regional banks that expanded their lending during the financial crisis.
The Bank of Queensland is stepping up its lobbying of Canberra to ensure smaller banks that grew their balance sheets during the crisis are not disadvantaged by the leveling of the fee structure of the guarantee, reported The Australian Financial Review.
Lower rated banks have argued for the removal of the premium charged between borrowers on the scheme.
But BoQ chief financial officer Ram Kangatharan urged the government to go one step further and level the insurance charge for past borrowings.
He said that not giving the same relief to the banks that have continued funding mortgages through the crisis would place an unfair burden on them.
"It advantages those institutions that cut back lending, which is against the government's policy objective," he said.
Other institutions that have raised guaranteed debt are Suncorp, ME Bank and ING Australia.
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Latest Comments
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Broker on
03 Feb 2010 02:39 PM
Just another reason client''s are better of dealing direct with the majors than going through a broker. At least the majors have some stability - look at what happened to RAMS clients from prior to the Westpac acquisition. The loans Westpac did not buy are now over 7.8% because RAMS couldn’t control their cost of funds - one of the highest standard variable rates in the country! Brokers are defiantly being squeezed and are now a second tier option themselves.
sniffer on
03 Feb 2010 05:22 PM
The government needs to support smaller lenders to ensure we have competition. NZ has Kiwi Bank which is government owned and offers cheaper rates than the aussie owned majors. Why not do something like that here?
Tony H on
04 Feb 2010 08:49 AM
Sniffer has been sniffing too much. The major banks can do just about anything they like in Australia because they have the Fed government firmly in their back pockets. The banks have successfully scattered the broking industry to their benefit and now may have the regional banks in their sights. No way in the world would a government owned bank emerge in Australia while we have the current puppets in power.