Banking

Analysis and Comment (38)

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Troubled bank is co-operating with the authorities. Rui Vieira/PA

What went wrong for the Co-op Bank?

By Martin Upton, The Open University

Collapsing business deals, massive financial losses, and a “junk” rating have made recent months a nightmare for the Co-op Bank. In March it announced losses of £634m for the 2012 financial year, largely…
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RBS: Not as valuable as it used to be. David Cheskin/PA

RBS sale: bad for taxpayers, bad for banking

By Andre Spicer, City University London

The UK could be about to make a multi-billion pound mistake. Plans to sell-off the 82% share of the Royal Bank of Scotland (RBS) and the 39% share of Lloyds owned by the taxpayer are gaining favour in…
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The City has been plagued by financial disasters. Will the replacement of the Financial Services Authority with two new banking regulatory bodies be enough to stop the rot? AAP Pictures

After a long line of financial disasters, UK banks on regulatory change

By Pat McConnell

If the UK Financial Services Authority (FSA) had been a dog, it would have been about 86 years old when it was put down on April Fool’s Day this year. Uncharitably, some say that the FSA, the lead regulator…
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The scale of China’s off-balance sheet lending may seem extensive, but it’s not the scary beast that many commentators have made it out to be. Philip Jagenstedt/Flickr

Light among the shadows: the upsides to a financial crisis in China

By James Laurenceson

In recent months, talk of an emerging crisis in China’s financial sector has been getting louder. A few weeks ago such chatter reached a crescendo, at least in terms of a narrative, when two Nomura economists…
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Talk of the Cyprus bailout sparked a surge in the value of virtual cryptocurrency Bitcoin. zcopley

Is the Cyprus crisis a boon for Bitcoin?

By David Glance, University of Western Australia

For most of us, banks represent a trusted and safe harbour for our money. Investing in fixed term deposits for example, is widely seen as a low-risk strategy. The global financial crisis changed that view…
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Cyprus is making a last-ditch bid to negotiate a bailout deal from the IMF, the EU and the ECB. AAP

As deadline looms, Cyprus' fate lies in the hands of the troika

By Fabrizio Carmignani, Griffith University

Last week, the Parliament of Cyprus rejected a bill that would impose a levy of 9.9% on bank deposits over the insurance threshold of €100,000 and a levy of 6.75% on deposits below the insurance ceiling…
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As the ABC’s Four Corners explored, small investors are being caught in an unregulated investment market, often with devastating results. Has the corporate regulator dropped the ball – or is it juggling too many? ABC Four Corners

As casualties pile up, has our investment sector become too big to regulate properly?

By Pat McConnell

Stephen Long’s story last night on the ABC’s Four Corners beautifully illustrated the human cost of financial misconduct, as retirees and widows described the pain of having lost their super funds and…
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Another day, another banking scandal: the UK Parliamentary Commission on Banking Standards has exposed the follies of the City’s badly behaved bankers. AAP

London’s bad bankers thrown into the lion’s den

By Pat McConnell

Though it rarely rates a mention in the Australian financial press, there is a spectacle in London at the moment that rivals even the most ferocious games at the Roman Colosseum. Almost every day, a bunch…
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In a blistering speech to the Banking Committee, Senator Elizabeth Warren exposed profound weaknesses in the US' current system of financial regulation. Flickr\mdfriendofhillary

Bankers left reeling as Senator Elizabeth Warren grills financial regulators

By Justin O'Brien

It was an artful if devastating performance. In just seven minutes, Senator Elizabeth Warren from Massachusetts signaled the arrival of what appears destined to be a powerful force on Capitol Hill. At…
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More of the same: the UK government’s banking reform bill is merely another capitulation to the banking lobby. AAP

UK banking reform bill won’t curb reckless risk-taking

By Prem Sikka, University of Essex

Some four and-a-half years after the banking crisis that has resulted in massive public debt and a deep austerity program, the UK government has finally unveiled its Financial Services (Banking Reform…
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Earlier this week, Stefan Ingves (left), chairman of the Basel Committee on Banking Supervision’s governing body, and Mervyn King announced amendments to Basel III’s liquidity rules for banks. AAP

Is the Basel process broken? You can bank on it

By Pat McConnell

This year, the Basel process of banking regulation is 25 years old. In 1988, the first set of global banking regulations, known as Basel I, was adopted by the world’s senior banking regulator, the Basel…
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As part of its settlement with the Department of Justice, an external monitor will be appointed to oversee HSBC’s corporate compliance processes.

Banks on alert as regulators step up pressure on HSBC

By Justin O'Brien

This week, two different approaches to embedding restraint began to take shape as London-headquartered banks reflected on the exceptional power of the United States Department of Justice to shift cultural…
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As regulators finally move on the Libor scandal, are they asking themselves the right questions?

In the Libor scandal, where were the regulators?

By Justin O'Brien

Welcome to the third and final part of Back to the Future. AS HSBC is fined US$1.9 billion for “egregious” money laundering and the first arrests are made in the Libor scandal, the need for the public…
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Institutionalising restraint is business practice will prove challenging for HSBC and regulators alike.

Banks behaving badly: HSBC settles in money laundering probe

By Justin O'Brien

The $1.92 billion deferred prosecution entered into by HSBC with US regulators is one of the most significant financial penalties imposed on a global bank. On Tuesday in a Federal Court in Brooklyn, HSBC…
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Rampant litigation in the financial sector will only create more risk for Australia’s banks. AAP

Too many lawsuits might break the banking sector

By Pat McConnell

This week, the National Australia Bank published its 2012 annual report, confirming that its net profit for the year had fallen by about 21%, mainly from higher bad and doubtful debt charges. Buried deep…
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Is there such thing as an ethical finance system? Proponents of Islamic finance believe so. Image from www.shutterstock.com

Can Islamic finance provide salvation for the banking sector?

By Jikon Lai, University of Melbourne

Islamic finance has grown and expanded rapidly in recent years. It was recently announced that, following in the footsteps of some of its European neighbours, Germany will soon have its first Islamic bank…
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Is a full enquiry into Australia’s banking industry overdue? source: shutterstock. Image sourced from shutterstock.com

Debunking the myth of our ‘well-regulated’ banks

By Pat McConnell

A Senate Economics Committee has been reflecting on life after the global financial crisis for Australian banks. The general consensus has been to date that Australian banks escaped the worst of the fall…
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Taking care of business: given the glacial pace of financial reforms since the GFC, it is not unreasonable to expect another crisis of the same magnitude. _Davo_

Crisis? What crisis? Five years on, we’ve surrendered to the global financial sector

By Jikon Lai, University of Melbourne

It has been five years since the sub-prime mortgage crisis emerged in the US. This was followed by financial institutions suffering liquidity shortfalls in both US and Europe, and their eventual collapse…
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A former mortgage broker – who is now facing fraud charges – has blown the whistle on predatory lending practices in Australia’s financial services industry. Image from www.shutterstock.com

There are predators in our own backyard, but where are our financial watchdogs?

By Philip Soos, Deakin University

The level of sub-prime mortgages in Australia may be far in advance of what was previously assumed and provided for by banks. The story was broken on the ABC, and covered elsewhere. The revelations centred…
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HSBC chief executive officer Irene Dorner testifies before the US Senate about allegations of money laundering within HSBC. AAP

HSBC’s money laundering scandal is more than just risky business practice

By Milind Sathye, University of Canberra

Recent news that HSBC executives admitted to allowing Iran, terrorists and drug dealers to launder nearly USD$16 billion over a six-year period would make earth underneath you shake. How is that the bank…
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A Diamond in the rough: Former Barclays chief executive Bob Diamond bore the brunt of public anger over the LIBOR scandal. But attention should be paid to behaviour of regulatory authorities. AAP

Gloom of the system: Barclays fallout highlights structural flaws in financial regulation

By Justin O'Brien

As the Deputy Governor of the Bank of England, Paul Tucker, prepares to give evidence to the Treasury Select Committee, he will be mindful of the insult thrown at Bob Diamond, the recently crestfallen…
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Will super Mario Draghi, President of the European Central Bank, come to the Eurozone’s rescue? AAP

It will take courage to end the Eurozone crisis

By Harald Sander, Cologne University of Applied Sciences (CUAS)

Today Eurozone leaders will meet in Brussels. On the agenda is nothing less than the survival of the euro. Officially, it is about Spain: Spain’s economic and financial woes show the urgency. Moody’s drastically…
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Could online peer to peer lenders compete with major banks? Flickr: Alan Levine

Could peer-to-peer lending challenge our banks?

By Milind Sathye, University of Canberra

In a recent speech, Bank of England executive director Andy Haldane has said that peer-to-peer (P2P) lending through online sites has the potential to eventually replace old-fashioned banking. It was followed…
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Bankrupt former billionaire Sean Quinn accepted highly risky loans from Anglo Irish Bank before it collapsed. AAP

Fallen billionaire Sean Quinn embodies Ireland’s boom to bust

By Colm Harmon

The fall of the “Mighty” Sean Quinn from Ireland’s (and Forbes-listed) richest man to one of the world’s most indebted individuals is perhaps the biggest story of Ireland’s boom-to-bust recent economic…
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Despite Cameron’s half-hearted efforts, democratisation of listed UK corporations is unlikely. AAP

‘Empowering’ shareholders won’t revolutionise corporate culture

By Prem Sikka, University of Essex

Executive remuneration is out of control in the United Kingdom. The final report by the High Pay Commission concluded that “there is rarely a link between directors’ incentives and the way a company performs…
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Loose regulation in the UK and elsewhere have left big banks vulnerable to crises.

Without serious reform, reckless banks will fall like dominoes

By Justin O'Brien

The most interesting aspect of the United Kingdom’s Financial Service Authority’s exhaustive review of the failure of the Royal Bank of Scotland (RBS) is contained in the foreword, penned by the organisation…
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ANZ and NAB have cut their mortgage rates. Will the other two major banks follow suit? AAP

Are banks gouging by not passing on interest rate cut?

By Dianne Thomson, Deakin University

ANZ and National Australia Bank have passed on the Reserve Bank of Australia’s 0.25% interest rate cut to mortgage holders, lowering their standard variable rates. Treasurer Wayne Swan called on the big…
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Personal loans should be used to fund major infrastructure projects, like the National Broadband Network. AAP

Want to end the GFC? Put debt to good use

By Kevin Cox, University of Canberra

The Global Financial Crisis should be called the Global Debt Crisis. Too much debt has been created and there is not enough productive capacity to pay the interest on the debt, let alone repay the loans…
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Euro banks have been urged to reinforce their balance sheets. AAP

Can ‘living wills’ protect the banking system?

By Kevin Davis, Australian Centre for Financial Studies

Eurozone leaders have moved to address liquidity fears, with the European Central Bank announcing new measures to head off a credit crunch. Britain has also announced quantitative easing measures. Outgoing…
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UBS chief Oswald Gruebel has stepped down after a rogue trader cost the bank $US2.3 billion. AAP

As UBS boss quits over rogue trader, banks must face some risk realities

By Milind Sathye, University of Canberra

The chief executive of Swiss banking giant UBS, Oswald Gruebel, has quit following revelations of a $US2.3 billion fraud by “rogue trader” Kweku Adoboli. But the news will come as cold comfort for investors…
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Well-intentioned credit protection regulations could make it hard for some people to secure loans. AAP

Responsible lending doesn’t have to be restrictive

By Therese Wilson, Griffith University

The Federal Government has taken significant steps in recent years to protect consumers from predatory lending practices, such as very high-interest “payday loans”. An unfortunate, though surely unintentional…
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Carrying cards and cash on your phone seems like a big call. Google

Is Google Wallet a virtual game-changer?

By Rob Livingstone, University of Technology, Sydney

So it’s finally here: Google Wallet, a free Android app that turns your (Google) smartphone into a mobile payment system, launched today. To do this, the company has partnered with Citi, MasterCard, First…

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