Westpac defies treasurer
(3 December 2009 – Australia) Westpac Banking Corporation has moved outside of the Reserve Bank of Australia’s (RBA) rate rise and is facing harsh criticism from the Treasurer over the move.
On Tuesday, the Reserve Bank of Australia announced, after its monthly board meeting, that due to resumed growth in the economy and improvements in the financial markets, they had decided to increase the official cash rate by 25 basis points to 3.75 percent.
In a statement made by Westpac, after the decision, the group said that they would be increasing their variable home lending rate by 0.45 percent; reflecting continuing wholesale funding pressures.
Peter Hanlon, group executive retail and business banking, Westpac, said that the interest rate changes announced reflect the continuing cost pressures the bank is experiencing in the wholesale funding market, as well as the increase in the official RBA cash rate.
These components, along with the higher rates we are paying on customer deposits, have contributed to Westpac having to increase their average funding cost, Mr Hanlon added.
Gail Kelly, chief executive officer, Westpac, was unavailable to comment yesterday.
The Treasurer, Wayne Swan, said that he sees no justification at all for this move by Westpac, cynically trying to use the cover of other events.
Mr Swan added that Westpac and any other bank that follows Westpac's cynical lead have given their customers a slap in the face for Christmas this year.
Westpac and any other bank that follows Westpac's lead can expect a very severe backlash from their customers and from the community generally, Mr Swan argued.
Westpac’s announcement came just after Mr Swan had conducted a doorstop interview saying he did not think there is any justification for banks to pass through more than the official cash rate which is decided independently by the Reserve Bank.
The extraordinary 0.45 percentage point increase will add A$84 to the monthly cost of repaying a A$300,000 mortgage, instead of the A$48 that would have been imposed had Westpac merely passed on the Reserve Bank's rate increase.
In a statement made by Westpac, after the decision, the group said that they would be increasing their variable home lending rate by 0.45 percent; reflecting continuing wholesale funding pressures.
Peter Hanlon, group executive retail and business banking, Westpac, said that the interest rate changes announced reflect the continuing cost pressures the bank is experiencing in the wholesale funding market, as well as the increase in the official RBA cash rate.
These components, along with the higher rates we are paying on customer deposits, have contributed to Westpac having to increase their average funding cost, Mr Hanlon added.
Gail Kelly, chief executive officer, Westpac, was unavailable to comment yesterday.
The Treasurer, Wayne Swan, said that he sees no justification at all for this move by Westpac, cynically trying to use the cover of other events.
Mr Swan added that Westpac and any other bank that follows Westpac's cynical lead have given their customers a slap in the face for Christmas this year.
Westpac and any other bank that follows Westpac's lead can expect a very severe backlash from their customers and from the community generally, Mr Swan argued.
Westpac’s announcement came just after Mr Swan had conducted a doorstop interview saying he did not think there is any justification for banks to pass through more than the official cash rate which is decided independently by the Reserve Bank.
The extraordinary 0.45 percentage point increase will add A$84 to the monthly cost of repaying a A$300,000 mortgage, instead of the A$48 that would have been imposed had Westpac merely passed on the Reserve Bank's rate increase.
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