Banks seek new funding avenues
(6 April 2010 – Australia) As credit becomes more accessible for consumers and businesses, banks are still struggling to find new ways to fund their loan books.
The common theme amongst Australian banking heads at Credit Suisse’s Asian Investment Conference in Hong Kong recently was, that although business credit in Australia was weak, overall credit demand would rise as domestic economic growth gathered pace.
While Gail Kelly, Westpac’s CEO, said that mortgage lending would continue to grow at a reasonable level in 2010, the National Australia Bank’s chief executive, Cameron Clyne, questioned the current level of real housing demand, the New Zealand Herald reported.
However CBA’s CEO, Ralph Norris, cautioned that housing affordability would dictate mortgage growth in 2011.
Mike Codling, Partner at PriceWaterhouseCoopers said that with the end of the Federal Government's wholesale funding guarantee on March 31, the risk that the price of rolling over wholesale term funding deals, used to fund loan books, will rise remains real.
However, Mr Codling pointed to Australia's continuing reliance on foreign funds to finance its current account deficit, funds that come at a price to the banks acting as intermediaries, the New Zealand Herald reported.
There is a very real risk the price will continue to increase, Mr Codling added.
As banks continue to roll over their wholesale debt programmes, which will become more expensive, the impact will wash through their funds transfer pricing and into their asset products, Mr Codling noted.
While Gail Kelly, Westpac’s CEO, said that mortgage lending would continue to grow at a reasonable level in 2010, the National Australia Bank’s chief executive, Cameron Clyne, questioned the current level of real housing demand, the New Zealand Herald reported.
However CBA’s CEO, Ralph Norris, cautioned that housing affordability would dictate mortgage growth in 2011.
Mike Codling, Partner at PriceWaterhouseCoopers said that with the end of the Federal Government's wholesale funding guarantee on March 31, the risk that the price of rolling over wholesale term funding deals, used to fund loan books, will rise remains real.
However, Mr Codling pointed to Australia's continuing reliance on foreign funds to finance its current account deficit, funds that come at a price to the banks acting as intermediaries, the New Zealand Herald reported.
There is a very real risk the price will continue to increase, Mr Codling added.
As banks continue to roll over their wholesale debt programmes, which will become more expensive, the impact will wash through their funds transfer pricing and into their asset products, Mr Codling noted.
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