Australian Bank funding cost claims 'mathematically impossible'

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  • Risto the Great
    Senior Member
    • Sep 2008
    • 15658

    Australian Bank funding cost claims 'mathematically impossible'



    Bank funding cost claims 'mathematically impossible'
    By Adam Smith | 21/02/2012 1:00:00 AM |


    The big four's claims of rising funding costs has been rubbished by a major French bank.

    The major banks have pointed to higher funding costs for their recent rate hikes, but Fairfax has reported that Societe Generale Asia Pacific head of interest rate strategy Christian Carrillo has called the claim "almost mathematically impossible". According to Fairfax, Carrillo dismissed the majors' claim in a recent research note.

    "The claim that the recent increase in mortgage rates is due to higher funding costs is very dubious. The mortgage hikes seem aimed at protecting their higher profit margins," Carrillo wrote. Carrillo instead argued that nearly all sources of funding for Australian banks are less expensive that their post-GFC highs and have contunued to fall in absolute terms since the second half of 2011. "Australian banks are essentially an oligopoly. They control most of the market anyway. They can effectively set rates where they want to," he said.

    Australian Bankers' Association CEO Steve Munchenberg dismissed Carrillo's research, saying it lacked specific bank funding models.
    "I would be surprised if he had access to the detailed funding of the banks on a bank-by-bank basis. You can't just look at the continuum of prices and average that out, because the banks tap the market at different times," he told Fairfax.
    I'm not believing the Australian banks for a second.
    Risto the Great
    MACEDONIA:ANHEDONIA
    "Holding my breath for the revolution."

    Hey, I wrote a bestseller. Check it out: www.ren-shen.com
  • George S.
    Senior Member
    • Aug 2009
    • 10116

    #2
    The eu debt has affected them how can greece which accounts for 2% of the eu debt affect them??
    Think of the logic the last time the resrve bank not to do anything the banks put the interst up prior to that the reserve bank recommended a fall the banks did nothing.Who is wrong & who is right.Maybe there should be an independent person setting interest rate as the banks collude & can't be trusted.
    Last edited by George S.; 02-20-2012, 06:48 PM.
    "Ido not want an uprising of people that would leave me at the first failure, I want revolution with citizens able to bear all the temptations to a prolonged struggle, what, because of the fierce political conditions, will be our guide or cattle to the slaughterhouse"
    GOTSE DELCEV

    Comment

    • Brian
      Banned
      • Oct 2011
      • 1130

      #3
      Originally posted by George S. View Post
      The eu debt has affected them how can greece which accounts for 2% of the eu debt affect them??
      Think of the logic the last time the resrve bank not to do anything the banks put the interst up prior to that the reserve bank recommended a fall the banks did nothing.Who is wrong & who is right.Maybe there should be an independent person setting interest rate as the banks collude & can't be trusted.
      Commercial interest rates in the USA are near zero. I think if the 'big four' went looking for funds around the world they would find cheap money.

      Just walk away with your business to any lender that gives you the cheapest rate and forget them.

      It's strange why Australians stay with the 'big four' banks. I have heard people say, "At least they are safe, what if another place goes broke". Any financial institution going broke only matters if they have your money on deposit, not if you have their money as a loan. A lot of places are mere administrators of the loan. For example I have a loan with X financial institution (not to be confused with Phoenix's Channel X News) but I ultimately owe the money to Perpetual Trustees which have links (I think) with everyone. If financial institution X goes broke my loan doesn't disappear or get called or can't be refinanced. There's no loss and no reason to stay with the banks except for a savings account because they have more ATMs everywhere.
      Last edited by Brian; 02-20-2012, 07:15 PM.

      Comment

      • Risto the Great
        Senior Member
        • Sep 2008
        • 15658

        #4
        The banks recent decision to depart from the Reserve Bank's directives simply makes a mockery of the government's monetary policies. Interesting times ahead and I wonder how the big 4 are getting away with this. Money talks.
        Risto the Great
        MACEDONIA:ANHEDONIA
        "Holding my breath for the revolution."

        Hey, I wrote a bestseller. Check it out: www.ren-shen.com

        Comment

        • ProMKD
          Member
          • Oct 2011
          • 367

          #5
          Recently the big USA banks announced a monthly mandatory fee to use debit cards, and this created a large social-network assisted uprising which saw 20% of big-bank customers sign with local credit unions, who were desperate for business, so they offered many incentives to new members. Maybe this is called for in AU? Do you guys use credit unions? What other financial institutions exist besides banks?
          www.everythingmacedonia.com
          Support tourism to Macedonia!

          Comment

          • Phoenix
            Senior Member
            • Dec 2008
            • 4671

            #6
            ProMKD, here in Australia we get fucked in the arse at every turn, whether that's at the petrol pump, the housing sector or food...the cost of living is very high...

            The entire banking system including credit unions derive huge profits from the multitude of ways that they bend their customers over.
            Fees exist for all manner of cards and banking practices from set up fees to exit fees.

            Our interest rates are amongst the highest in the industrial world and the main four banks are protected by an outdated policy called the 4 pillars policy (4 major banks)

            Comment

            • ProMKD
              Member
              • Oct 2011
              • 367

              #7
              It's really too bad, I've seen the destruction of society and the middle-class in almost all 'developed' nations. It's happening everywhere, and it's a systematic destruction, none of this is happening by accident. Free market my ass!
              www.everythingmacedonia.com
              Support tourism to Macedonia!

              Comment

              • Big Bad Sven
                Senior Member
                • Jan 2009
                • 1528

                #8
                Originally posted by Risto the Great View Post
                The banks recent decision to depart from the Reserve Bank's directives simply makes a mockery of the government's monetary policies. Interesting times ahead and I wonder how the big 4 are getting away with this. Money talks.
                ANZ made a $1.48 billion quarterly profit and yet they saked over a thousand aussie workers, thats totally unfair.
                To make matter worse ANZ boss Mike Smith is taking his top staff on a $1.75 million cruise just weeks of sacking all of these people. Each of the 200 passengers - 100 staff and their guests - will have a personal butler.

                It seems the big 4 and also the mining companies can do anything they want, great leader Julia Gillard is too scared to stand up to them, or she might go the way of Krudd

                Comment

                • George S.
                  Senior Member
                  • Aug 2009
                  • 10116

                  #9
                  It's called the great rippoff because the banks are colluding.Everyone thought by derefulating the banks it's going to be better for the consumer.The cosumer get's screwed big time.It's all profit making & it's exhorbitant affecting those who have boorrowed to the hilt.The amount of houses repossessed is rising.
                  The govt should have an independent umpire to police the rates not like the reserve bank creating open slather.I pity the borrower.
                  "Ido not want an uprising of people that would leave me at the first failure, I want revolution with citizens able to bear all the temptations to a prolonged struggle, what, because of the fierce political conditions, will be our guide or cattle to the slaughterhouse"
                  GOTSE DELCEV

                  Comment

                  • Zarni
                    Banned
                    • May 2011
                    • 672

                    #10
                    Australians are mugs the first view is walk away and go to another Leander but the fact remains you will be better of sitting down with a broker and your Bank and demanding a better deal most Australians just assume it is a done deal once they sign and when they move on to another Leander the small details eat away the Problem in Australia is banking legislation then competition

                    Comment

                    • Zarni
                      Banned
                      • May 2011
                      • 672

                      #11
                      THE Commonwealth Bank is celebrating its home-loan selling success with a "pirate party", days after raising interest rates to protect mega-profits.


                      THE Commonwealth Bank is celebrating its home-loan selling success with a "pirate party", days after raising interest rates on customers to protect mega-profits.

                      Comment

                      • Bij
                        Member
                        • Oct 2009
                        • 905

                        #12
                        Full disclosure - I work for one of the big 4 and they're dickheads.

                        today they announced internally nobodies job is safe. great, thanks for that!

                        also recently they cut our bonuses, made it a smaller percentage of people eligible for a bonus, and made it more difficult to get a bonus!!!!

                        Time to get in to a new industry. Anyone hiring?

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