Big Four at opposite ends of scale
(27 November 2009 – Australia) Reports released this week by Australia’s largest banks spell out vastly contrasting positions of credit exposures amongst the big four.
The big four have released their internationally accepted Pillar 3 Basel II reports, disclosing their current risk and capital exposures.
Basel II is the name given to the capital adequacy framework for authorised deposit-taking institutions to adopt a more advanced risk management approach.
NAB announced that the bank has achieved a 6.6 percent reduction in its credit exposures during 2008-09; dropping from A$675 billion this time last year to A$630 billion.
The group’s September quarter exposures were 3.8 percent lower than reported in the bank’s half yearly 2009 results.
ANZ reported total credit exposures to of A$510.87 billion for the 12 months to September 30; a 4.6 percent reduction.
In stark contrast, Westpac Banking Corporation’s total credit exposures increased to A$593.8 billion at September 30; an overall increase of 28 percent.
Commonwealth Bank also reported a jump of 22 percent to A$650.8 billion at September 30th.
Industry regulator, the Australian Prudential Regulatory Authority (APRA), requires all authorised deposit taking institutions to hold set ratios of eight percent to combat unanticipated losses and provide a capital buffer.
The big four currently comply by Australian standards after putting in a mammoth effort to raise an extra A$20 billion in capital.
However, ratings agency, Standards and Poor’s said that due to hybrid securities making up a quarter of Australian banks capital they believed that the banks have insufficient funds to cover their lending exposures.
NAB's tier 1 capital ratio sits at 8.96 percent, CBA's at 8.19 percent, Westpac's at 8.1 percent, and ANZ's at 10.6 percent.
Basel II is the name given to the capital adequacy framework for authorised deposit-taking institutions to adopt a more advanced risk management approach.
NAB announced that the bank has achieved a 6.6 percent reduction in its credit exposures during 2008-09; dropping from A$675 billion this time last year to A$630 billion.
The group’s September quarter exposures were 3.8 percent lower than reported in the bank’s half yearly 2009 results.
ANZ reported total credit exposures to of A$510.87 billion for the 12 months to September 30; a 4.6 percent reduction.
In stark contrast, Westpac Banking Corporation’s total credit exposures increased to A$593.8 billion at September 30; an overall increase of 28 percent.
Commonwealth Bank also reported a jump of 22 percent to A$650.8 billion at September 30th.
Industry regulator, the Australian Prudential Regulatory Authority (APRA), requires all authorised deposit taking institutions to hold set ratios of eight percent to combat unanticipated losses and provide a capital buffer.
The big four currently comply by Australian standards after putting in a mammoth effort to raise an extra A$20 billion in capital.
However, ratings agency, Standards and Poor’s said that due to hybrid securities making up a quarter of Australian banks capital they believed that the banks have insufficient funds to cover their lending exposures.
NAB's tier 1 capital ratio sits at 8.96 percent, CBA's at 8.19 percent, Westpac's at 8.1 percent, and ANZ's at 10.6 percent.
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