Eurozone Crisis Prepared To Bite Australian Banks

By ETHAN Markoff
November 26, 2011

EURO CRISIS NEWS - The eurozone crisis is now paving its way in biting hard the local banks in Australia. It will be a headache soon for the Gillard government while the major Australian banks have already escalated warnings.

In recent weeks the banks have experienced increasing difficulties in borrowing money from the international markets, and are offering higher rates to investors to get funding and then lend it to mortgage-holders.

The National Australia Bank earlier agreed the government, citing increase in funding costs, when it passed 20 points of the Reserve Bank's 25-point cut in the official rates.

Warning has also been given by former bank executives and industry analysts that the future rate cuts is being further undermined by Europe conditions. They cited that Germany, AAA-rated, faced problems this week in raising funds from bonds investors.

Mike Smith, ANZ chief executive said that the country is in the middle of serious crisis presently.

Meanwhile, the Australian stockmarket slipped down yesterday for sixth consecutive day. S&P/ASX 200 is down 1.5% and closed at 3984.30.

ANZ Chief Executive Mike Smith

Australia Stock Market

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November 26, 2011 | 0 comments

ANZ: New Global Bank Rules Could Have Choking Effects On Economy

By STAFF Writer
October 28, 2011

NEW ZEALAND NEWS - ANZ slams the new Basel III rules for banks worldwide to increase capital adequacy and liquidity within the banks to withstand global financial shocks. Its chief executive Michael Smith told recently to the Commonwealth Business Forum in Perth that the new rules could have a 'chocking effect' on the economic recovery across the world.

Mr. Smith noted the rules were moving way far ahead of big uncertainty. He told to the delegates, "Far from increasing access to finance and improving economic resilience, I am concerned that in the current environment, there is a real possibility overly conservative rules with an aggressive implementation timetable are likely to have a choking effect on global recovery."

He also pointed to last week's International Monetary Fund (IMF) warning, which said the forces were again at work now that caused 1930s Great Depression, as businesses, governments and households simultaneously have started cutting back spending and de-leveraging balance sheets.

Mr. Smith added, leading economies' banks need to raise capital of $US1.3 trillion for complete transition to the new regulatory requirements.

He said, as per the IMF the economic cost of new regulations could raise lending of global banks by 3.5 per cent points in next five years. The regulations also include Basel III.

He also said that Basel III had been moderated earlier, but there was nothing. It is broken in Australia which needs fixing.

Global financial crisis of 2008

Global financial crisis of 2008 forced travel cuts

Malaysia economy clock during global financial crisis

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October 28, 2011 | 0 comments