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Australian banks reduce exposure to US markets

Australian banks reduce exposure to US markets

(27 June 2012 – Australia) The country’s big four have reduced exposure to the United States money market since January according to ratings agency Fitch. US money markets funds' exposure to Australia's banks has fallen by nearly a quarter since the start of the year to 7.6 percent of total US fund assets under management, the group said.

Fitch Australia's director of financial institutions, Tim Roche, said it was basically a continuation of the trend they've seen since 2008 where the banks are restructuring their funding profiles to focus more on domestic deposits and longer-term funding and less on short-term wholesale funds sourced from offshore markets.

Australian banks' liquidity requirements have increased as a part of the Basel III reforms aimed at improving the stability of the global banking system.

Reduced demand for mortgages has forced banks to offer consumers more competitive deposit rates. Westpac, for example, has outlined a strategy to refocus on winning more deposits and offering more products to wealthy customers in years ahead.

Fitch said it expected demand for US money market funds to rise ''when demand for credit increases, but we do not foresee a return to the pre-2008 funding mix''.
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