BoQ wants equality among big and small
(4 December 2009 – Australia) David Liddy, managing director, Bank of Queensland has campaigned for a flat fee to be charged across all banks to lower borrowing costs for smaller regional banks.
The Bank of Queensland is taking up the Federal Governments funding guarantee as the bank continues to encourage the government to level the playing field that allows banks to rent out the Commonwealth’s AAA credit rating.
The bank is trying to raise A$1.1 billion from debt investors whilst taking advantage of the scheme that was introduced at the height of the financial crisis.
Mr Liddy said that smaller banks were important for keeping competition alive across the sector.
He highlighted the power of the big four, noting that ‘super banks’ like Westpac had already increased mortgage rates above the Reserve Bank's move in official rates.
The Australian Government should want to ensure that the remaining alternatives to the big four are able to remain competitive, Mr Liddy added.
The Rudd government has been called upon to overhaul the pricing of the wholesale guarantee.
Under the current guarantee, the big four, which have a AA rating, pay an extra 70 basis points annually for bonds issued under the scheme.
However, smaller banks must pay up to 100 to 150 basis points extra; the Bank of Queensland pays the full 150 basis points due to its BBB credit rating.
This is the third time that BoQ has taken advantage of the funding guarantee despite the added costs.
Strong interest from investors both here and offshore prompted BoQ to more than double the size of its original A$500 million debt issue offer. Last night, pricing for the issue was at 50 basis points above the bank bill swap rate.
Australian banks have raised A$115 billion of guaranteed funds this year, compared with A$80 billion of non-guaranteed funds.
The bank is trying to raise A$1.1 billion from debt investors whilst taking advantage of the scheme that was introduced at the height of the financial crisis.
Mr Liddy said that smaller banks were important for keeping competition alive across the sector.
He highlighted the power of the big four, noting that ‘super banks’ like Westpac had already increased mortgage rates above the Reserve Bank's move in official rates.
The Australian Government should want to ensure that the remaining alternatives to the big four are able to remain competitive, Mr Liddy added.
The Rudd government has been called upon to overhaul the pricing of the wholesale guarantee.
Under the current guarantee, the big four, which have a AA rating, pay an extra 70 basis points annually for bonds issued under the scheme.
However, smaller banks must pay up to 100 to 150 basis points extra; the Bank of Queensland pays the full 150 basis points due to its BBB credit rating.
This is the third time that BoQ has taken advantage of the funding guarantee despite the added costs.
Strong interest from investors both here and offshore prompted BoQ to more than double the size of its original A$500 million debt issue offer. Last night, pricing for the issue was at 50 basis points above the bank bill swap rate.
Australian banks have raised A$115 billion of guaranteed funds this year, compared with A$80 billion of non-guaranteed funds.
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