Big four yield to pressure
(12 December 2011 — Australia) After two days of silence from Australia’s big four banks after the Reserve Bank of Australia (RBA) rate cut, all finally yielded to political pressure.
There was a storm of public protest and heat from Treasurer Wayne Swan before ANZ made the first move, announcing on Thursday it would pass on the 25 basis point rate cut, followed by NAB.
A day later Westpac and Commonwealth Bank of Australia (CBA) also moved, with the CBA considering whether it would pass on the full cut.
All banks will continue charging the old rates until 16 December and ANZ has stipulated it will no longer follow the RBA’s decisions, instead reviewing its rates on the second Friday of every month.
The shift means that for ANZ's 700,000 customers, their interest rates could rise or fall even when the central bank has left official rates unchanged.
The big banks return on equity is high compared to their counterparts overseas. The Commonwealth makes 19.5 percent per year, NAB 15 percent, Westpac 16 percent and ANZ 15 percent. US big banks make 5.7 percent, British big banks 3.5 percent and banks in mainland Europe 8 percent.
Swan has asked his business tax working group to report by the end of the year on the feasibility of introducing a tax on outsized returns on equity as part of a trade-off that would cut corporate tax on ordinary profits to zero.
A day later Westpac and Commonwealth Bank of Australia (CBA) also moved, with the CBA considering whether it would pass on the full cut.
All banks will continue charging the old rates until 16 December and ANZ has stipulated it will no longer follow the RBA’s decisions, instead reviewing its rates on the second Friday of every month.
The shift means that for ANZ's 700,000 customers, their interest rates could rise or fall even when the central bank has left official rates unchanged.
The big banks return on equity is high compared to their counterparts overseas. The Commonwealth makes 19.5 percent per year, NAB 15 percent, Westpac 16 percent and ANZ 15 percent. US big banks make 5.7 percent, British big banks 3.5 percent and banks in mainland Europe 8 percent.
Swan has asked his business tax working group to report by the end of the year on the feasibility of introducing a tax on outsized returns on equity as part of a trade-off that would cut corporate tax on ordinary profits to zero.
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