CBA ups rates on cost hike
(12 June 2009 – Australia) CBA has announced that it will increase a range of loans by 10 basis points due to rising funding costs, a move which has caused Government backlash.
CBA will increase variable and fixed home loan rates, as well as residentially secured business loans by 10 basis points.
In explaining the rate rise, Ross McEwan, group executive Retail Banking Services for CBA said that wholesale funding costs remain high and continue to increase as previous long term funding matures and is replaced with new funding at significantly higher cost.
At the same time, due to intense competition for retail deposits, the cost of deposits compared to the official cash rate is extremely high, Mr McEwan added.
CBA noted that despite the rise, its variable home loan rate is still the lowest of the major banks.
Australia Prime Minister, Kevin Rudd, led the backlash over the move by CBA to raise rates in an environment where the RBA has pushed rates down by 400 basis points in the last year.
Mr Rudd said that the decision hinders the efforts of the Government, the RBA and the business community to stimulate the economy during this global recession.
The federal opposition have put blame on the Government’s debt requirements. Shadow Treasurer, Joe Hockey, said that if the Government is borrowing so much money in competition with the banks, then the cost of funds to the banks will inevitably rise.
In explaining the rate rise, Ross McEwan, group executive Retail Banking Services for CBA said that wholesale funding costs remain high and continue to increase as previous long term funding matures and is replaced with new funding at significantly higher cost.
At the same time, due to intense competition for retail deposits, the cost of deposits compared to the official cash rate is extremely high, Mr McEwan added.
CBA noted that despite the rise, its variable home loan rate is still the lowest of the major banks.
Australia Prime Minister, Kevin Rudd, led the backlash over the move by CBA to raise rates in an environment where the RBA has pushed rates down by 400 basis points in the last year.
Mr Rudd said that the decision hinders the efforts of the Government, the RBA and the business community to stimulate the economy during this global recession.
The federal opposition have put blame on the Government’s debt requirements. Shadow Treasurer, Joe Hockey, said that if the Government is borrowing so much money in competition with the banks, then the cost of funds to the banks will inevitably rise.
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