Banking News

Smith speaks out on politics, regulation and a second GFC

Smith speaks out on politics, regulation and a second GFC

(20 February 2012 – Australia) ANZ chief executive Mike Smith said politics wasn’t helping the Australian economy, calling for an end to point-scoring to focus on the long-term challenges facing the nation. Smith also hit out at tough new bank rules that are being rolled out globally, stating they would occur at the worst possible time for the world economy.

"I have to be blunt here and say politics isn't helping, we need to bring more focus to the long-term opportunities and challenges facing Australia, rather than short-term point scoring," Smith said at an investor briefing.

Smith echoed other bank bosses in declaring the sector is grappling with a major structural shift. This overhaul will involve the pace of credit growth slowing across Australia and New Zealand, while profit margins will continue to be squeezed on rising funding costs.

Smith remained cautious on the outlook for the global economy saying it had entered "the second and more protracted phase of the global financial crisis."

And this concern over the economic outlook overseas is prompting a cautious behaviour for both Australian consumers and businesses, he said.

Meanwhile, Smith said increasing global regulation is permanently increasing the cost of banking.

"I think when looking at changes like Basel III, whilst these reforms were well-intentioned, some of the changes are coming at the worst possible time for the world economy. I really do worry about the consequences for growth and stability, especially in Europe," he said.

For their part, bank regulators, including the Australian Prudential Regulation Authority (APRA) said the rules are designed to make banks safer and help rebuild investor confidence in the sector.
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