THE chief executive of the nation's biggest bank, Ian Narev, has urged the regulator not to impose a "significant" charge on banks deemed too big to fail, arguing Australia's lenders must remain globally competitive.
Amid uncertainty about the impact on dividends from the charge, Commonwealth Bank's Mr Narev told The Weekend Australian the capital levy was the biggest outstanding regulation the banks faced.
From 2016, the Australian Prudential Regulation Authority will impose a charge on "domestically systemically important banks" (D-SIB), requiring them to potentially hold up to $14 billion in additional capital.
While APRA did not reveal the quantum of the charge in a recent letter to the banks, the regulator has said it will soon implement a framework and publish the key elements of its methodology by the end of the year.
"We've obviously factored a variety of scenarios into that so we feel like we are prepared," Mr Narev said after CBA's annual meeting in Adelaide. "We do not believe there needs to be a significant D-SIB surcharge because we think the Australian banks are very well capitalised in a manner which actually reflects their systemic importance.
"We feel like it's very important to make sure capital levels of Australian banks keep Australian banks globally competitive, but beyond that we'll wait and see what APRA does."
At an event in Sydney, Westpac chairman Lindsay Maxsted indicated the nation's second-biggest bank was also well placed to comply with the D-SIB charge, given its leading capital level.
But he conceded that the banks' return on equity levels remained exposed to uncertainties around capital and liquidity rules, despite the sector's extensive relative progress in complying to new regulation.
Around the globe, countries are phasing in the D-SIB charge to adhere to the Basel III banking rules as insulation from another global financial crisis. In Canada, a similar economy to Australia, banks have three years to comply with the D-SIB charge.
The Australian banks have to achieve common equity tier-one capital ratios of at least 7 per cent by 2016, not including the D-SIB charge, which they will exceed with tier-one ratios already more than 8 per cent.
While confident the banks can comply with a D-SIB capital surcharge of as much as 150 basis points on top of 7 per cent, analysts are concerned about the impact on capital management plans in the near term.
At CBA's AGM, chairman David Turner echoed other senior bankers, including ANZ's Mike Smith, that the outlook "may be a little stronger" next year for the banks. He also acknowledged the "shocking" conduct by some of CBA's former financial planners, saying the bank had improved culture and processes. All CBA's resolutions were approved by shareholders, including the remuneration report.
Mr Narev said that, while the early signs from customers were better, there was still a "way to go" before it translated into higher overall lending growth.
His comments came as the Reserve Bank downgraded its economic growth forecast for calendar 2014 to 2-3 per cent, from 2.5-3.5 per cent. On Thursday, official data showed full-time jobs had dropped for six straight months as the jobless rate remained at 5.7 per cent.
Mr Maxsted said business wanted a "more consistent" climate in which to make investment decisions, which was "starting to happen" under the new government. Mr Turner agreed that the Coalition was "off to a good start".
That corresponds with talk of a lift in general sentiment and some more bullish comments this week from Wesfarmers chief Richard Goyder, who anticipates better trading conditions at Christmas, noting "there's been a few signs in recent weeks of a bit more life".
From 2016, the Australian Prudential Regulation Authority will impose a charge on "domestically systemically important banks" (D-SIB), requiring them to potentially hold up to $14 billion in additional capital.
While APRA did not reveal the quantum of the charge in a recent letter to the banks, the regulator has said it will soon implement a framework and publish the key elements of its methodology by the end of the year.
"We've obviously factored a variety of scenarios into that so we feel like we are prepared," Mr Narev said after CBA's annual meeting in Adelaide. "We do not believe there needs to be a significant D-SIB surcharge because we think the Australian banks are very well capitalised in a manner which actually reflects their systemic importance.
"We feel like it's very important to make sure capital levels of Australian banks keep Australian banks globally competitive, but beyond that we'll wait and see what APRA does."
At an event in Sydney, Westpac chairman Lindsay Maxsted indicated the nation's second-biggest bank was also well placed to comply with the D-SIB charge, given its leading capital level.
But he conceded that the banks' return on equity levels remained exposed to uncertainties around capital and liquidity rules, despite the sector's extensive relative progress in complying to new regulation.
Around the globe, countries are phasing in the D-SIB charge to adhere to the Basel III banking rules as insulation from another global financial crisis. In Canada, a similar economy to Australia, banks have three years to comply with the D-SIB charge.
The Australian banks have to achieve common equity tier-one capital ratios of at least 7 per cent by 2016, not including the D-SIB charge, which they will exceed with tier-one ratios already more than 8 per cent.
While confident the banks can comply with a D-SIB capital surcharge of as much as 150 basis points on top of 7 per cent, analysts are concerned about the impact on capital management plans in the near term.
At CBA's AGM, chairman David Turner echoed other senior bankers, including ANZ's Mike Smith, that the outlook "may be a little stronger" next year for the banks. He also acknowledged the "shocking" conduct by some of CBA's former financial planners, saying the bank had improved culture and processes. All CBA's resolutions were approved by shareholders, including the remuneration report.
Mr Narev said that, while the early signs from customers were better, there was still a "way to go" before it translated into higher overall lending growth.
His comments came as the Reserve Bank downgraded its economic growth forecast for calendar 2014 to 2-3 per cent, from 2.5-3.5 per cent. On Thursday, official data showed full-time jobs had dropped for six straight months as the jobless rate remained at 5.7 per cent.
Mr Maxsted said business wanted a "more consistent" climate in which to make investment decisions, which was "starting to happen" under the new government. Mr Turner agreed that the Coalition was "off to a good start".
That corresponds with talk of a lift in general sentiment and some more bullish comments this week from Wesfarmers chief Richard Goyder, who anticipates better trading conditions at Christmas, noting "there's been a few signs in recent weeks of a bit more life".
theaustralian.com.au 9 Nov 2013
Corpau has recently obtained information regading fraud, corruption in the magnitude of billions of dollars involving the head of the Commonwealth bank Ian M Narev.
The Austalian Federal Police, together with the taxation department with certain other key politicians with law makers and judges are involved in this large scale corporate fraud
Some people are allowed to get away with multi million/billion dollar fraud, the like of Telstra's ex chief Solomon Trujillo.
Politicians allow their crony colleagues to commit fraud at the expense of public pockets, only to flee the country.
If a 'ctizen' would commit a crime one hundredth of the magnitude, customs officers would have an arrest warrant.
Solomon Trujillo's fraud was detailed in a wikipedia article, but was removed due to Solomon's legal team's pressure.
The original article has been posted on:
http://solomontrujillo.blogspot.com.au/
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