(4 May 2010 – Australia) Commonwealth Bank’s CEO, Ralph Norris, continues to see wholesale funding sources for Australia’s commercial banks requiring higher premiums in their lending.Although fully-funded for this year, CBA will be looking for cheaper rates in its wholesale funding as, notwithstanding the roll over of older funding prior to the Global Financial Crisis biting. This is as true for the other major Australian domestic lenders as it is specifically for the Commonwealth, although it is generally perceived by markets that Westpac has the largest requirement for offshore funding this year amongst the “Big 4” of around A$40Bn.
The banks are using this funding situation as a key platform in managing the pricing at which they will lend to customers and hence their margins as well as encouraging the Henry Tax Review to enhance the tax treatment of retail deposits, thus providing some tax relief for savers. This has been a common song for some months now and is a critical issue for Australia’s banks as this domestic deposits market accounts for roughly half their total funding requirements.