GLOBAL SUB-PRIME CRISIS

BANKILEAKS

Click on our Secret Library of Evidence ------>

    BANKILEAKS Secret Library

Loan Application Forms (LAF's)  

    Bank Emails to Brokers  

    Then Click on 'VIEW NOTEBOOK'

Join us on facebook
 

facebook3           facebook2 

BFCSA
MORTGAGE
DISTRESS SOS

What BFCSA Does...

BFCSA investigates fraud involving lenders, spruikers and financial planners worldwide.  Full Doc, Low Doc, No Doc loans, Lines of Credit and Buffer loans appear to be normal profit making financial products, however, these loans are set to implode within seven years.  For the past two decades, Ms Brailey, President of BFCSA (Inc), has been a tireless campaigner, championing the cause of older and low income people around the Globe who have fallen victim to banking and finance scams.  She has found that people of all ages are being targeted by Bankers offering faulty lending products. BFCSA warn that anyone who has signed up for one of these financial products, is in grave danger of losing their home.

Visitors

Articles View Hits
657241

Whistleblowers' Corner!

To all mortgage brokers, BDMs and loan approval officers! 
Pls Call Denise: 0401 642 344 

"Confidentiality is assured."

Cartoon Corner

Lighten your load today and "Laugh all the way to the bank!"

Denise Brailey

Led by award-winning consumer advocate Denise Brailey, BFCSA (Inc) are a group of people who are concerned about the appalling growth of Loan Fraud around the world. BFCSA (Inc) is a not for profit organisation in the spirit of global community concern and justice.

Click on the Cluster Map.

  • Home
    Home This is where you can find all the blog posts throughout the site.
  • Categories
    Categories Displays a list of categories from this blog.
  • Bloggers
    Bloggers Search for your favorite blogger from this site.
  • Login
    Login Login form

BFCSA: David Murray Report smacks down banks: Consumer Trust and Confidence blown

Posted by on in ROYAL COMMISSION URGENT
  • Font size: Larger Smaller
  • Hits: 1351
  • 0 Comments
  • Print

Financial system inquiry: David Murray smacks down banks’ ‘wild’ capital claims

PUBLISHED: 7 hours 37 MINUTES AGO | UPDATE: 6 hours 32 MINUTES AGO

 

http://www.afr.com/p/business/financial_services/financial_system_inquiry_david_murray_IlZFq8Xod3SVrMNGeJDP5K

Jonathan Shapiro

David Murray may have spent most of his career in banking but that hasn’t prevented him – or the financial system inquiry he has led – lambasting the lobbying efforts of the big four banks.

He has emphatically rejected claims by the banks that they are among the best capitalised in the world and that efforts to force them to hold more capital will cause harm by increasing rates to customers and reducing returns to shareholders.

What has become immediately apparent in the FSI report’s opening chapter is that Murray and his panel have taken exception to the banks’ claims that they are among the best capitalised in the world.

The Australian Bankers Association had commissioned a report from accountants PwC to back up their claims that the banks’ capital was among the top quartile of banks, claiming a common equity tier one ratio could be adjusted up to 12.7 per cent, higher than the 11.6 per cent assessed by international banking body in Basel.

But the analysis was rejected by the Murray panel, which picked apart the ABA capital study noting it restricted the number countries used in the study, didn’t adjust for foreign bank capital items and adjusted certain items to “international best practice” without sufficient justification.

The FSI deferred to rating agency Standard & Poor’s assessment that the banks’ capital level was “adequate” rather than strong or very strong.

Murray also rejected the claims by the big banks that higher capital charges would impose exorbitant costs on the system. The inquiry estimated that a one percentage point increase in capital would only result in loans increasing by 10 basis points – or 0.10 of a per cent.

Furthermore, any increase in equity only impacted only 0.5 per cent of the cost of funding of any given loan. The impact on the economy would be minimal – a reduction of less than 0.1 percentage point of GDP

Mr Murray went on the attack in the press conference, branding comments by bank chief executives about the impact of higher capital changes “wild” and “exaggerated”.

“The public statements by the banks are wildly above those numbers. They are exaggerated. Hopefully other experts will look at those numbers and conclude similar to ours,” he said.

Costs borne by customers and shareholders

But Mr Murray did acknowledge that the cost of making the system will need to be borne in part by the bank’s customers and shareholders.

“The impact could be on bank returns. One, bank returns could be lower and still be attractive investments, and secondly they could be lower and still have enough internal capital generation to support economic growth.”

Australian Bankers Association chief executive Steve Munchenburg provided an immediate defence of the banks’ calculations on capital.  “We did a thorough piece of work and used PwC globally to look at an analysis of where banks sit relative other banks in other jurisdictions.”

“We stand by that piece of work. Obviously there are differences of opinions because there is a lot of judgement that goes into reports but we stand by our current levels of capital and individual banks are free to comment on what they think the implications are of higher capital for their businesses”

For Mr Murray there was no debate.   “Even a modest crisis costs 900,000 jobs, so the recommendations are designed to look after the taxpayer and may have an insurance cost to the system. But we think the trade off is a fantastic one.”

And the Treasurer’s advice to the banks was to give up the fight.   “I think it would be unwise for the banks to respond with that sort of campaign. This is about the security of the financial system,” Treasurer Joe Hockey told the Australian Financial Review.

“When David Murray was first appointed there was a criticism David Murray would be the voice of the big banks. Now he has made these recommendations. If APRA – as the body that determines [ultimate capital levels] – takes a similar view, that is up to them, as they are an independent prudential regulator,” he said.

“The banks would serve themselves best by working closely with APRA and having a considered path to manage this – I don’t think creating any public alarm or angst is going to help the banks."

Last modified on
Rate this blog entry:

Comments

  • No comments made yet. Be the first to submit a comment

Leave your comment

Guest Thursday, 12 December 2019