Treasurer shows no mercy
(8 December 2009 – Australia) Treasurer Wayne Swan has stepped up criticism of the biggest banks for raising interest rates above the Reserve Bank's 25 basis point move, accusing them of taking families for a ride.
Mr Swan defended the Reserve Bank of Australia’s decision to raise the official interest rates by 0.25 percentage points, to 3.75 percent, saying that the RBA could not keep rates at 50 year lows forever.
However, Mr Swan did not extend the same grace to the three major Australian banks that dared to move beyond the authority’s official movements.
Mr Swan said that any bank that used the RBA's official rate rise as an excuse to take families for a ride this Christmas is letting down their customers and their country.
This is one reason the big banks are criticised by the Australian community, Mr Swan said.
Despite higher funding costs, regional lender Bendigo and Adelaide Bank managed to limit their rate rise to only 5 basis points above the RBA.
Managing director Mike Hirst said the fee structure for banks to use the government guarantee to raise funds was uneconomic for small banks, such as Bendigo.
Under the current guarantee, the big four, which have a AA rating, pay an 70 basis points annually for bonds issued under the scheme.
However, smaller banks must pay up to 100 to 150 basis points due to their level of credit rating.
However, Mr Swan did not extend the same grace to the three major Australian banks that dared to move beyond the authority’s official movements.
Mr Swan said that any bank that used the RBA's official rate rise as an excuse to take families for a ride this Christmas is letting down their customers and their country.
This is one reason the big banks are criticised by the Australian community, Mr Swan said.
Despite higher funding costs, regional lender Bendigo and Adelaide Bank managed to limit their rate rise to only 5 basis points above the RBA.
Managing director Mike Hirst said the fee structure for banks to use the government guarantee to raise funds was uneconomic for small banks, such as Bendigo.
Under the current guarantee, the big four, which have a AA rating, pay an 70 basis points annually for bonds issued under the scheme.
However, smaller banks must pay up to 100 to 150 basis points due to their level of credit rating.
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