Australian banking major ANZ’s online stock broking unit E*Trade posted a weak set of results as it suffered from increased levels of competition and investor caution stemming from the global financial crisis.
E*Trade Australia Securities did manage to make a dividend payment to its parent, but according to a filing with the Australian Securities and Investments Commission recorded a lower level of turnover for the year ending September 30th 2010, which resulted in reduced profits.
As Australia’s stock brokers seek to compete more aggressively with global investment banks, two of the largest brokers plan to merge their operations.
On Friday, Bell Financial Group, which is listed on the Australian stock exchange announced its intention to merge its two wholly owned subsidiary’s Southern Cross Equities and Bell Potter in a deal which would created a full service independent stock broker which provides services for both institutional and retail clients, as well as offer investment banking and research.
Australian investment banking major Macquarie has downgrade both ANZ and CBA on concerns of new capital ratio requirements resulting from the Basel III banking reform proposals.
The Basel III banking reforms, which will gradually be implemented over time, requires lenders to maintain a 6 per cent minimum tier one capital ratio, up from 4 per cent.
Australian banking major National Australia Bank (NAB) has been downgraded by a second broker following its failed acquisition attempt of Axa Asia Pacific Holdings (APH).
Earlier in the week, Macquarie downgraded NAB to “neutral”, whilst on Thursday UBS followed suit and also downgraded the lender to neutral from “buy”. Jonathan Mott UBS banking analyst said that NAB’s stock price now traded in line with UBS’s valuation, following the competition regulators decision to deny permission for the lenders proposed acquisition of APH.
Australian investment banking major, Macquarie, which today revealed a 25 per cent drop in first half profit estimates, now faces the difficult task of cutting costs as the groups seeks to return to its former level of profitability.
Macquarie estimates first half profits of approximately$360 million, compared with $479 million in the same time period in the previous year.
One of the largest global managers of fixed income securities, Pimco, says that Australia now offers the most investment opportunities in the developed world.
During one of its regular updates to the global bond markets, David Fisher who runs global product management for Pimco also said there was a “new normal environment”, which looked much different to that of previous decades.
Volatile global financial markets that plunged in the aftermath of the European sovereign default crisis have consumed the highly anticipated bounce in super fund returns.
The drop in financial markets is likely to result in investment earnings falling below double digits for the financial year, ending at about 9.6 per cent.
The Australian Stock Exchange, which with ASIC acts as a corporate regulator says it intends to monitor portfolio and mutual fund managers closely, as it seeks to stamp out the practice of window dressing.
Window dressing typically occurs at the end of the financial year and is a deliberate strategy managers engage in of price manipulation which dresses up the performance of the portfolio or fund before presenting the performance to clients or unit holders.
A new survey by global banking giant HSBC suggests that fund managers are more bullish on equities today, than they were three months ago, and are maintaining their holdings of Australian equities steady.
Nicholas Moore, chief executive of Australian investment banking major Macquarie Group says that proposed changes to regulatory framework had created an environment of uncertainty in the banking industry, whilst the investment bank announced a profit forecast that was below market expectations.