Australian Banks Concerned About The Threat Of Regulation

Post by NeilMc on February 2, 2010 · Under Australian Economy, Business News, banking · Comment

Australian lenders say the greatest threat to their industry over the next year is the prospect of increased regulation.

Professional services firm PriceWaterhouseCoopers conducted a global survey of international banks, the results of which revealed their biggest concern to be increased regulation, despite some US and European banks being under part government ownership.

For the first time in 15 years, the term “Politicalisation” of the sector was identified as the greatest threat to the industry.

The survey was conducted prior to Barack Obama’s proposed changes to banking regulation, which would serious restrict the ability of deposit taking institutions to engage in proprietary trading activities.

The proposals have already been termed an over-reaction by financial institutions.

The UK recently introduced a 50 per cent one off bonus tax on the banking industry which would be levied on bonuses exceeding £25,000.

Mike Codling, head of PwC’s banking practice said that Australian lenders seemed to be most worried about the effects of new regulation, rather than overt political interference.

Australian lenders are most concerned about proposals which would require them to hold a larger proportion of liquid assets, rather than the commercial paper of other banks.

“The biggest issue for the Australian banks is what the government does to our own banks. The question is how the regulators will respond and whether it will be a case of the tail getting wagged by the dog in Europe.” Mr. Codling said.

The chief executives of the major Australian lenders have re-iterated their position that Australian banking, which emerged from the crisis in relatively good shape, does not require the same changes in regulation that will be applied to their international rivals.

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