Big Australian banks create $2 billion car fund
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The big Australian banks Commonwealth Bank, ANZ Bank, Westpac & the National Australia Bank will setup a special fund to provide financial support to the local car industry.
The domestic car financing market has been hit hard recently by the withdrawal of major car financiers including GE Money which has forced a number of businesses to consider bankruptcy.
The announcement by the treasurer Wayne Swan today revealed the $2 billion trust will provide liquidity to car dealers through securing eligible loans. The fund will commence on 1 January 2009 and will be secured by the government for 12 months.
ANZ & Westpac drop rates by less than RBA cut
Both ANZ and Westpac have reduced their standard variable rate to 6.91% after ANZ announced a reduction of 0.83% and Westpac 0.80% as the RBA cut rates today by 1%.
The ANZ rate cut takes effect from 12 December.
Both banks failed to match the full cut by the Commonwealth Bank and National Australia Bank who announced earlier today a cut to their standard variable rates to 6.74%.
Best Australian Deposit Rates
Here at Australian Bank Watch we have spent some time looking for some of the best Australian deposit rates available whether they be at call savings accounts, cash managements account or online savings accounts.
It would be of little surprise that none of the major Australian banks failed to feature in the top handful but expect the major banks to show an increased effort to attract savers.
The major banks have so far concentrated on term deposits but the Commonwealth Bank have recently been advertising their Cash Management account where they offer 5.75%, remember this is above the RBA rate of 5.25%.
However, a number of other well known institutions are offering better deals.
AMP is the best with an eASYCash Management account that is offering 7.35%, the Bank of Queensland also offer an excellent rate with their WebSavings account that has an introductory rate of 7.20%.
The ANZ backed One Direct offer a high interest saver account that offers a solid 7% return while the superannuation backed Members Equity have a Online Savings account offering 6.50%.
They are followed by other major institutions such as St George’s Direct Saver with 6.50%, Adelaide Banks Cash Management Trust with 6.35%, Bankwest with a Telenet Saver account offering 6.25% on a promotional rate and Macquarie Bank with their Cash Trust offering 6.25%.
At a time when the world sharemarkets are in major upheaval perhaps now could be a good time to re-allocate what available cash you have into one of these high interest accounts.
ANZ CEO earns $13 million
The new ANZ boss Mike Smith earned $13 million in the last financial year to make him the highest paid banking CEO in Australia.
Mike Smith waas recruited from HSBC in a mjaor coup for chairman Charles Goode. Mike Smith is highly regarded internationally and has already implemented a dramatic de-risking of ANZ since commencing with the bank.
Smith’s pay was made up from an annual salary of $7.8 million and sign on bonus of $5.1 million.
ANZ prepare to cut 1000 jobs
It has been reported that ANZ plan to cut 1000 jobs from middle management in what will be the first major series of job cuts from Australian banks in the current economic downturn.
The Age reported that 3000-3500 jobs could be cut as part but an ANZ spokesman confirmed that such cuts were not confirmed adding further credence to the 1000 jobs cuts.
KPMG speculated last month some 10,000 jobs could be cut from the banking sector in the coming 12 months from in excess of 150,000 workers in the sector.
Australian Banks dumped on sharemarket
Growing fears of a major recession in Australia hit banks heavily today as all bar the National Australia Bank were heavily sold off as thr market tumbled today by 5.4%.
Westpac which was previously seen as the most stable domestic bank was sold off heavily falling over 11% to $16.97 as fear gripped the market. St George who announced today that shareholders approved the Westpac merger fell by over 9%.
ANZ Bank fell just under 9% to $14.05 and the Commonwealth Bank fell nearly 6 per cent to $33.00 after warning that recent company collapses will impact upon their first half results.
The National Australia Bank faired best falling 2.66% to $19.40.
The sell-off follows market fears of further negative announcements from banks regarding their debt blowouts and likely capital raisings similar to that of the National Australia Bank earlier this week.
Commonwealth Bank hit 3.5 year lows
The Commonwealth Bank today hit a three and a half year share price low over broker downgrades and concerns about debt provisioning after being caught up in a number of corporate collapses.
Several major brokers have downgraded the Commonwealth Bank in recents days as concern has grown that that they are not as safe as previously expected.
Previously the ANZ and National Australia Bank were considered high risk while Westpac and the Commonwealth Bank were considered lower risk. But in recent days the National Australia Bank has undertaken a $3 billion capital raising and funds have started to flow from the Commonwealth Bank into NAB.
The Commonwealth Bank is also burdened by having to raise in the vicinity of $14 billion to replace BankWest funding. The Commonwealth will be able to secure the funding but in the current climate this could be at a considerable premium.
In another negative the Commonwealth Bank is also trailing it’s rivals with a tier 1 capital ratio of 7.6% compared to the recently increased National Australia Bank at 8%.
Rod Eddington is new ANZ Chairman
The ANZ announced today Rod Eddington will replace retiring chairman Charles Goode in the second half of 2009.
Eddington, a former CEO of British Airways will have a transition period with Goode before taking over the helm announced ANZ.
In other board announcements Lee Hsien Yang will join the ANZ board on 1 February 2009. Lee Hsien Yang was the former Singpore Telecommunications CEO and is the brother of the Singapore Prime Minister Lee Hsien Loong.
Alison Watkins and Peter Hay will also be join the board replacing Margaret Jackson and Jerry Ellis.
Banks reveal ABC Learning debt exposure
After the appointment of administrators to Allco Finance Group yesterday, today saw adminstrators appointed to ABC Learning.
The childcare centre provider finally faultered under the weight of debt and fell into administration after being unable to re-negotiate their debt and business arrangements.
Of the Australian banks to reveal an exposure to date, ANZ have revealed a provision of around $182 million while Westpac has revealed a $200 million exposure.
Both banks are reviewing their exposure to the company and adjusting their provisions accordingly.
ANZ cut rates by 0.58% to 7.74%
ANZ became the fourth major bank yesterday to cut their interest rates in response to the RBA Melbourne Cup day announcement of a 75 basis point cut.
The ANZ cut will take their standard variable loan to 7.74%, the cut takes effect from 14 November. The other major banks announced cuts taking effect on 10 November.
What was of most interest in the ANZ Media Release was the statement from ANZ Australia CEO Brian Hartzer that ‘As market conditions allow, we will continue to pass on further reductions in funding costs to our customers’.