NAB seek $2.75 billion share placement
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The NAB in a quarterly update announced a $2.75 billion capital raising, $2 billion from institutional investors and $750 million through a retail share offer.
The share placement will increase tier one capital from 8.2% to 8.8% in what was a mild surprise to the market and indicated that we have not sen the end of the bank capital raisings.
The announcement makes the recent ANZ announcement even better timed as they managed to jump in first to secure capital with others likely to come back to the table for further funds.
The bank will also raise up to $750 million through an offer of new shares to retail investors.
NAB used the market update to also indicate tat they have taken a charge for bad and doubtful debts which rose to $1.06 billion for the three months to 30 June 2009. The announcement indicated that the bank was being hit hard by the market crunch and general rise in bad debts.
The equity raising will go some way to secure further liquidity for the bank at a time when the Australian economy has not hit the peak of the downturn.
Should you fix rates on your mortage?
Well do you think you should fix your mortgage now? Well with interest rates near the low point in the cycle then it could be the perfect time to fix your mortgage.
Traditionally when the economic talk is still negative and the rumours in the market are for the RBA to make further cuts it is almost perfect time to lock in rates. The markets have all kicked higher with the hope of the economy recovering through 2009 but home owners should not wait till the economy improves as the RBA will but trying to slow the rapid growth that low interest rates will generate.
While interest rates are still low by historical standards it’s hard to imagine they will be at or near similar levels in two years time as the economy is likely to be back in full gear by then.
If your happy to take your chances and ride the cycles stick with the variable rate but if you want any mortgage certainty consider locking in now. Remember it has been along time since the official cash rate was anywhere near current levels.
NZ Tax Bill to hot Australian Banks
New Zealand has been an unhappy hunting ground in recent years for Australia’s top four banks and it seems to be the case again with the big banks looking at a AUD$1.9 billion tax bill after a ruling by the New Zealand High Court.
The decision was against the National Australia Bank regarding sic structured finance transactions. While an appeal is a given the NAB are looking at needing to raise capital to cover the $550 million approx provision.
Justice John Wild said the transactions had “no commercial purpose or rationale”, other than to use the bank’s tax capacity to generate exempt income. The decision puts not only NAB but CBA, Westpac and ANZ on a collision course with regulators and a similar outcome.
It would seem ANZ and Westpac have adequate provisions already in case whereas CBA was less clear.
ANZ raise $2.2 billion in Share Purchase Plan
The ANZ Bank has pulled off an amazingly successful share purchase plan raising $2.2 billion from retail investors.
The retail share placement is the largest in Australian corporate history after a planned raising of $350 million. Investors in ANZ were allocated their full entitlement at $14.40 per share. The ANZ share price closed down over 2% today at $15.89 indicating some retail investors were already taking profits.
The share purchase plan takes the ANZ tier one capital to 9.5%, the largest of all the banks.
RBA keep rates steady
The Reserve Bank of Australia (RBA) kept rates steady at a near 50 year low of 3.00% yesterday amid increasing levels of positivity about the state of the Australian economy.
Glenn Stevens the Reserve Bank Governer indicated the RBA still had room to reduce interest rates should the need arise due to the marginal impact of inflation in the current forecasts. While Glenn Stevens indicated the RBA still had scope to cut rates the general tone was positive and the state of the Australian and global economies would have to further deteoriate for the RBA to consider a cut.
It is highly likely we have either seen the bottom or are with 0.25% of the bottom of the cycle. Some forecasters are already looking at an increase in early 2010 as the uptick takes hold.