ANZ & Westpac drop rates by less than RBA cut
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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%.
Commonwealth Bank error affects 200,000 customers
The Commonwealth Bank went into damage control yesterday after an error affected up toi 200,000 bank customers across Australia.
The banking error erased funds from bank accounts for customers who performed transactions between Saturday and Monday.
Steve Batten a Commonwealth Bank spokesman said the error occurred because transactions were being duplicated due to a batching issue.
Commonwealth Bank customers would not be charged interest or fees as a result of any error that may have caused the account to be overdrawn or other fees to be inadvertantly generated.
Banks to pass on deposit guarantee
ANZ and the Commonwealth Bank have announced they will pass on the costs related to the federal government deposit guarantee.
NAB & Westpac have yet to announce their plans which comes into effect from midnight 27 November 2008.
The Government has three scales for the deposit insurance, 70 basis points for AA-rated lenders, 100 basis points for those rated A and 150 basis points for BBB-rated and unrated organisations.
Institutions such as the Bank of Queensland will absorb as much of the cost as possible whereas other’s like the Macquarie Bank have advised they will absord the total cost of the guarantee.
Both the ANZ and Commonwealth Bank as AA rated lenders will pass on the full 70 basis point charge to customers, the ANZ will introduce this as an opi-in or opt-out for customers who have more than $1 million in a cash account.
For customers with less than $1 million the federal government will cover the cost of the guarantee.
Rates forecast to hit near 50 years low in April 2009
Latest forecasts are expecting the Reserve Bank cash rate to hit 2.75% by Easter 2009 as the global slowdown continues to bite the economy.
Debt futures markets are forecasting a cash rate of 2.75%, a decrease of 2.5% from current Reserve Bank levels.
THe last time the cash rate was this low was 1960 when the cash rate hit 2.9%. Debt markets have also upped the expectation of a rate cut to 1.25% in December.
The expected falling interest rates are on the minds of major central bankers around the world as the global economies have or are falling into recession. The powerhouse German economy and Europe announced they were in recession last week and are hot on the heels of the faltering UK and US economies.
Suncorp Metway raise profit guidance in banking division
Suncorp Metway have surprised the market by upgrading their profit guidance in their banking business after revealing higher revenue and a focus on costs.
Suncorp however revealed a retreat from large corporate lending and syndicated loans while revealing a cut to loan growth rates. Suncorp announced an expectation of the banking profit to rise in the double digits before tax and bad debts.
The previous outlook was for single digit growth and is a sign of hope among the gloom affecting other major Australian banks.
Suncorp revealed Impairment losses are expected to be in the 35 to 40 basis point range of total loans, advances and other receivables for the full year. This compares favourably with it’s rivals.
Despite the somewhat more upbeat announcement by Suncorp Metway on their banking division the general trend of the economy is likely to put further pressure on the banks in coming months.
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.
Babcock on borrowed time
Babcock & Brown is on borrowed time as they cling onto hope that they will survive the current economic decline that has seen Babcock lost 99% of it’s value in the last 12 months.
Babcock and Brown revealed this morning it was in danger of breaching the debt covenants in place and is looking to re-negotiate the debt terms to survive.
Babcock declared plans to sell assets and sack 50% of it’s workforce to keep the company viable. Even these plans seem unlikely to save the company that was heralded as the next Macquarie Bank only one year ago.
Babcock is certainly trading on borrowed time and is likely to go into a trading halt and is likely to disappear totally from the bourse.
The company are heavily debt laden and has $2.8 billion in senior bank debt and another $300 million in debt. The total of $3.1 billion is spread evenly over the major banks and any failure for Babcock to come to terms with the banks will leave the majors with further bad debts on their books.
Macquarie deliver better than expected profit
The Macquarie Group delivered a better than expected profit today amid the continuing economic gloom unveiling a net profit of $604 million for the xic months to 30 September 2008.
Macquarie’s profit fell by 43%, however profits where ahead of analyst expectations.
What had pleased the market and pushed the Macquarie Group share price up immediately was news that the bank had surplus capital of $3.3 billion and had no plans to access capital markets for funding.
Macquarie’s statement of considering acquisitions was also a major positive for the share price. The CEO Nicholas Brown confirmed the bank was planning job cuts and expected profits to grow although at a lower level amid difficult trading conditions.
To read the announcement click Macquarie Bank.
RBA Minutes of Monetary Policy for November 2008
The Reserve Bank of Australia released it’s minutes from it’s monetary policy meeting on 4 November 2008 today.
These minutes always make for interesting reading but even more so at a time when the economic environment is as dire as it is today.
Click on RBA to read the minutes from the Melbourne Cup day meeting when interest rates were cut.
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.