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Analysis and Comment (41)

Why is the City keeping its suffering under wraps? Why is the City keeping its suffering under wraps? Robin Hawkes

Banks pay a heavy price for the crisis, but fail to count the cost

The major international banks are being lumbered with more and higher fines as the fallout from the financial crisis continues. Our research as part of the Conduct Costs Project at the CCP Research Foundation…
Greater asset diversification would help Australian banks lock in a buffer for future downturns. Greater asset diversification would help Australian banks lock in a buffer for future downturns. Joel Carrett/Flickr

Australian banks are too exposed to mortgages, but what if the world was flat?

One of the issues currently being considered by Australia’s Financial System Inquiry is the heavy exposure of Australian banks to the residential mortgage market. The exposure to domestic mortgages, which…
US bankers like JPMorgan’s Jamie Dimon fear increased bank regulation. US bankers like JPMorgan’s Jamie Dimon fear increased bank regulation. Chuck Hagel/Flickr

Time for bankers to have a capital rethink

A plan by US regulators to impose greater capital requirements on the nation’s eight biggest banks has prompted complaints it will put the banks at a global disadvantage. The proposal is that the banks…
All banking comes with risk, but it could be better disclosed. All banking comes with risk, but it could be better disclosed. Shutterstock

Why your bank account should come with a risk rating

What is the interest rate on your savings account? If you don’t know, you can easily find out. Banks advertise their rates prominently. They want you to know what they’re offering. After all, the interest…
Hitting a brick wall? Hitting a brick wall? lydia_shiningbrightly

Flaws in our thinking mean banks can do without our trust

The ongoing global financial crisis (because we’re not out of it yet, are we?) is often characterised as a crisis of trust. Distrust of the banks was a major theme – but distrust extended also to credit…
The evil empire? The evil empire? Stefan Rousseau/PA

It’s time to put social impact of finance on the curriculum

The global crash of 2008 kicked off a furious debate in the UK about whether or not the City of London is a real asset to the economy. There was huge anger about the multi-billion bail-out of failed banks…
Prior to the global financial crisis, 100% loans were commonplace in Australia. Prior to the global financial crisis, 100% loans were commonplace in Australia. Casey Konstantin/Flickr

Risk on? Australian banks skirt unofficial home lending limits

Australian banks are much more heavily exposed to mortgage lending than banks in most parts of the world, which is why the latest publication of APRA data on home lending has set the hares running. The…
Bank of Melbourne relaunched its new look branch network in 2011 as part of a broader push to build customer relationships. Bank of Melbourne relaunched its new look branch network in 2011 as part of a broader push to build customer relationships. Joe Castro/AAP

Barclays is closing branches, but Aussie banks slow to follow

UK banking giant Barclays has revealed plans to lay off 1700 branch staff and shrink its branch network as customers embrace online and mobile banking. The street faces of banks are changing quickly. Where…
Commonwealth Bank chief Ian Narev announces a record full-year profit of A$7.8 billion, ahead of this week’s $2.1 billion quarterly result. Commonwealth Bank chief Ian Narev announces a record full-year profit of A$7.8 billion, ahead of this week’s $2.1 billion quarterly result. Paul Miller/AAP

Bank profits grow, and so does the criticism. Who’s right?

Like most companies, banks report their profits twice a year. Each time the majors report we see headlines about the size of the profits and implicit or explicit criticism of the amount – this time about…
Recent regulator thinking on the financial system has been to favour stability over competition. Recent regulator thinking on the financial system has been to favour stability over competition. thehutch/Flickr

From crisis to cosy: why banking needs another inquiry

Reporting season has delivered another round of record bank profits. Yet, in itself, this is no bad thing. Former Reserve Bank governor, the late Sir Harold Knight, used to quip that profitable banks don’t…
ANZ chief Mike Smith was recruited to help ANZ succeed in Asia. ANZ chief Mike Smith was recruited to help ANZ succeed in Asia. Julian Smith/AAP

Australian banks in Asia a high stakes gamble

ANZ Bank has delivered another record profit, promising shareholders a bigger dividend than expected on the back of cash earnings of A$6.49 billion. But despite the bank’s continued Australian and international…
In the good old days you could spot a robber from his glossy finish. In the good old days you could spot a robber from his glossy finish. foilman

How to commit a bank robbery (or stop one) using the internet

Two recent incidents have shown that you no longer need to risk life and limb to rob a bank. In September, an attempted cyber-robbery at a London branch of Santander was stopped in its tracks and shortly…
Are there viable investment alternatives to funding coal and energy projects in the Great Barrier Reef region? Are there viable investment alternatives to funding coal and energy projects in the Great Barrier Reef region? AAP

Can banks make a profit by investing in the Great Barrier Reef?

Earlier this month, Australia’s Big Four banks copped a serve over their support of the coal and gas extraction industries, focusing attention on the ways large banks' investment decisions can put the…
RBS: Not as valuable as it used to be. RBS: Not as valuable as it used to be. David Cheskin/PA

RBS sale: bad for taxpayers, bad for banking

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…
The new virtual postman: Australia Post is about to launch its Digital MailBox. The new virtual postman: Australia Post is about to launch its Digital MailBox. www.shutterstock.com

Australia Post’s digital delivery scheme may yield few returns to spender

Australia Post have every reason to be pleased with their role in the online shopping revolution. They are central to the process by providing a means of converting the virtual into the real, by delivering…
Deposit insurance has been mooted for Australian banks - but should we accept as given current banking structures which create too-big-to-fail banks? Deposit insurance has been mooted for Australian banks - but should we accept as given current banking structures which create too-big-to-fail banks? AAP

Should there be a bank deposit guarantee fee?

There is a growing chorus of support for introduction of a fee for the protection provided to bank deposits (up to the $250,000 cap) by the Financial Claims Scheme (or deposit insurance as it would be…
A former mortgage broker - who is now facing fraud charges - has blown the whistle on predatory lending practices in Australia’s financial services industry. 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?

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…
UK-listed bank Standard Chartered stands accused of violating US sanctions against Iran by hiding $237 billion in transactions with Iranian banks. UK-listed bank Standard Chartered stands accused of violating US sanctions against Iran by hiding $237 billion in transactions with Iranian banks. AAP

Standard Chartered’s laundering charges are another blow for the banking sector

The suit lodged against Standard Chartered in Manhattan by the New York State Department of Financial Services has served its first purpose: capturing the headlines and putting the banking industry once…
Banks behaving badly: ensuring banks' sustainability reports are accurate and credible will go some way in restoring public confidence. Banks behaving badly: ensuring banks' sustainability reports are accurate and credible will go some way in restoring public confidence. AAP

To be good corporate citizens, banks must improve their sustainability reporting

“Events over the past couple of years have raised profound questions about the ways in which banks and businesses contribute to society. For both to play their full part, they must restore trust and become…
Former Barclays chief executive Bob Diamond leaves the Treasury Select Committee after giving evidence in London. The LIBOR-fixing scandal is the latest in a long line of dubious and illegal schemes. Former Barclays chief executive Bob Diamond leaves the Treasury Select Committee after giving evidence in London. The LIBOR-fixing scandal is the latest in a long line of dubious and illegal schemes.

Durable change a long way off for scandal-ridden UK banking system

The role of Barclays bank in manipulating the London Interbank Offered Rate (LIBOR) continues to dominate international financial media. The bank has already attracted fines from regulators in the UK and…
Pay it down - Treasurer Wayne Swan goes through his now-usual exhortation to banks to pass on today’s Reserve Bank 25 basis point rate cut in full. Pay it down - Treasurer Wayne Swan goes through his now-usual exhortation to banks to pass on today’s Reserve Bank 25 basis point rate cut in full. AAP

Reserve Bank cuts rate to 3.5% - experts respond

Amid the tumultuous economic climate in the US and Europe - not to mention the tumbling fortunes of our sharemarket - the Reserve Bank of Australia has followed market sentiment and cut the official cash…
Fears over Greece saw the Australian dollar dip under parity for the first time since December. Fears over Greece saw the Australian dollar dip under parity for the first time since December. AAP

Explainer: some respite for exporters and tourism as dollar dips below parity

The Australian dollar has touched below parity with the US dollar for the first time since December last year. This will no doubt disappoint the long line of Australian citizens touring the world, firms…
Graeme Samuel and Stephen King: two of Australia’s most senior regulators sit down together for The Conversation. Graeme Samuel and Stephen King: two of Australia’s most senior regulators sit down together for The Conversation.

Graeme Samuel: We’ve lost principled, analytical debate in this country

What happens when two of Australia’s best known former competition regulators sit down together and talk about the world? A wide-ranging discussion on the state of Australia’s political debate, xenophobia…
Moves by ANZ last week to hike their interest rates was criticised by Treasurer Wayne Swan: but historically, banks have often been at odds with governments. Moves by ANZ last week to hike their interest rates was criticised by Treasurer Wayne Swan: but historically, banks have often been at odds with governments. AAP

Never mind the miners: here’s the bankers

In Australia’s economic history, there always been tension between Labor and the banks. My grandfather was an adviser to wartime Labor Treasurer and Prime Minister, Joseph Benedict Chifley, better known…
If one of Australia’s big four banks were to fail, it would be disastrous for the economy and the financial system. If one of Australia’s big four banks were to fail, it would be disastrous for the economy and the financial system. AAP

A system at risk: the case for regulatory overhaul in Australia’s banking sector

The focus of the statement by the Australia-New Zealand Shadow Financial Regulatory Committee asks whether the systemic importance of the big four Australasian banks warrants special regulatory treatment…
The proposed Volcker Rule, which will ban proprietary trading by commercial banks, has raised the ire of Wall Street. The proposed Volcker Rule, which will ban proprietary trading by commercial banks, has raised the ire of Wall Street. Bête à Bon-Dieu

Risks or rewards? What the Volcker Rule means for Wall Street

The agenda of the Australian Securities and Investments Commission Annual Summer School in Sydney was dominated by discussions on how to reduce systemic risk. The noted increase in the regulatory perimeter…
Decoupled: The Reserve Bank of Australia’s decision to hold interest rates has been ignored by the banks. Decoupled: The Reserve Bank of Australia’s decision to hold interest rates has been ignored by the banks. AAP

Rates of wrath: understanding the Big Four’s actions on interest rates

Last week, the Reserve Bank defied market expectations to announce the 4.25% cash rate would remain unchanged. But the surprise decision by Australia’s Big Four banks to act independently of the Reserve…
Three of Australia’s Big Four banks have opted to offshore part of their financial operations to Asia. Three of Australia’s Big Four banks have opted to offshore part of their financial operations to Asia. AAP

More offshoring of Australian jobs? Can you bank on it?

Reports of more offshoring of jobs from Australia to other countries are, seemingly, a daily occurrence. Such reports include, for example, the manufacturing of cars and their components and aspects of…
Reducing the finance costs of housing will also reduce house prices. Reducing the finance costs of housing will also reduce house prices. Flickr/kennymatic

A house for half the cost? Here’s how

Welcome to Safe as Houses, a series delving into a topic close to the heart of many Australians – property. This is not a series on where the market might be heading. Instead we aim to explore how we view…
ANZ and NAB have cut their mortgage rates. Will the other two major banks follow suit? 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?

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…
Bank of England Governor Mervyn King has warned UK banks to prepare for the worst. Bank of England Governor Mervyn King has warned UK banks to prepare for the worst.

Britain prepares for worst, but liquidity will be key to stabilising Europe

Bank of England Governor Mervyn King has called on British banks to lift their capital reserves, hold off on paying dividends and cut bonuses amid growing fears about Europe’s economic stability. King’s…
Westpac chief Gail Kelly has warned about “the contagion effect” from Europe. Westpac chief Gail Kelly has warned about “the contagion effect” from Europe.

The contagion effect: how much will Australian banks be buffeted by Europe?

Westpac chief executive Gail Kelly this week warned about Australian banks are vulnerable to “the contagion effect” of Europe’s ongoing financial woes, after the Commonwealth Bank of Australia delayed…
Can we expect more interest rate cuts this year? Can we expect more interest rate cuts this year?

Interest rate cut: experts respond

The Reserve Bank of Australia has cut the official cash interest rate by 25 basis points, from 4.75% to 4.5%, in a move matching most economists' expectations. It was the first cut since April 2009. Westpac…
Banks such as NAB are reportedly positioning themselves to use covered bonds to raise funds. Banks such as NAB are reportedly positioning themselves to use covered bonds to raise funds.

Banks want covered bonds, but could taxpayers be left with the risk?

Australian banks are positioning themselves to take advantage of new laws allowing them to use the new instrument of covered bonds to raise funds. Our large banks especially have enthusiastically welcomed…
UBS chief Oswald Gruebel has stepped down after a rogue trader cost the bank $US2.3 billion. 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

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…
Well-intentioned credit protection regulations could make it hard for some people to secure loans. Well-intentioned credit protection regulations could make it hard for some people to secure loans. AAP

Responsible lending doesn’t have to be restrictive

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…
The British banking sector is facing a major shakeup in the wake of the global crisis. The British banking sector is facing a major shakeup in the wake of the global crisis. AAP

Three years after UK’s banking crisis, will reforms deliver?

Major proposals designed to reform Britain’s banking sector after its spectacular 2008 crash have been described as one of the biggest shakeups in a generation. But they are likely be inadequate for a…
Surprisingly few people change banks, believing it is more complicated than it actually is. Surprisingly few people change banks, believing it is more complicated than it actually is. AAP

Despite your fears, dumping your bank won’t end in tears

Treasurer Wayne Swan is fond of telling anyone who will listen how much he wants bank customers to “walk down the road and get a better deal”. This sums up the government’s vision for reforming the banking…
Good financial inclusion measures will protect consumers from predatory lenders. Good financial inclusion measures will protect consumers from predatory lenders. Flickr/rinkjustice

Giving credit where it’s due will ensure financial inclusion

The Australian government has begun to focus on the issue of financial inclusion, as reflected by an allocation of $60.6 million in this year’s federal budget. This follows earlier government support for…

Research Briefs (1)