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.
NAB, Commonwealth & St George join in cutting rates
The National Australia Bank (NAB), Commonwealth Bank and St George joined Westpac and ANZ today by announcing rate cuts to their standard variable rates.
All major banks have now passed on the full 100 basis point cut to consumers.
NAB and Commonwealth have slashed their rates to 5.74% while St George have lowered their rate to 5.89%, the rate changes are effective from 13 February.
NAB and Commonwealth were at pains to point out that future interest rate cuts by the RBA may not be passed on in full to consumers as the demands and pressures on bank margins continue.
Westpac and ANZ first to cut
Westpac became the first of the banks to cut rates after the RBA announced a cut of 100 basis points to reduce the cash rate to 3.25%.
ANZ followed shortly after announcing a full cut of 100 basis points just like Westpac.
The ANZ and Westpac have lowered their rates to 5.91%. The ANZ announced the cut will take effect from 13 February and further cuts will be passed on subject to funding costs.
As at the time of posting the Commonwealth Bank and NAB have not announced a rate cut..
Big Australian banks create $2 billion car fund
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.
Commonwealth Bank and NAB pass on rates in full
The Commonwealth Bank and NAB have passed on the rate cut in full after the RBA rate cut today where the Reserve Bank cut rates by 100 basis points.
Both banks have benefited from banking inflows which have made the task of providing the full rate easier than their competitors the ANZ Bank and Westpac.
The Commonwealth Bank announced they will pass their rate cuts onto new and existing customers from 12 December 2008.
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%.
RBA cut by 100 basis points
The Reserve Bank of Australia today announced a cut to the RBA interest rate of 100 basis points to 4.25%.
The rate cut reduces the RBA rate to it’s lowest level since December 2001. The RBA Chief Glenn Stevens indicated that more cuts are likely but they are unlikely to be in the range of recent cuts more along the lines of the traditional rate cuts of 0,25% to 0.50%.
The Commonwealth Bank, National Australia Bank and Westpac all reacted swiftly by cutting rates. The full rate cut was passed on my the Commonwealth Bank and the National Australia Bank but Westpac only passed on 0.80%.
NAB cut fixed home loan rates
NAB announced plans to cut their one year fixed interest home loan by 1% to 5.59%. The change takes effect on 1 December 2008.
The cut lowers the one year fixed introductory rate to 4.99% and the two year fixed home loan rate that also had a 1% cut to 5.59%.
The interest rate reduction from National Australia Banks comes ahead of the expected 1% cut from the Reserve Bank of Australia next week.
Could foreign Banks abandon Australian market?
The Australian has an excellent article today regarding the potential for foreign banks to abandon the local loan market with some $54 billion at risk from foreign banks retreating the local market.
The recent flood of equity raisings by a host of major companies including the National Australia Bank and Incitec have perhaps anticipated the move by offshore banks to retreat from the local market. Plus the actual cost to seek funds from the money markets have made equity a far superior option.
But accessing equity from sharemarket investors comes at considerable cost to the share price as existing shareholders are diluted and inevitably share prices fall.
It will be interesting to see how other major companies like the Commonwealth Bank and Wesfarmers proceed over coming months as they seek additional funding options.
Click to article name to read Local turmoil should offshore banks head home
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.