ANZ Opens Up Branches In Singapore
After successfully completing the acquisition of Royal Bank of Scotland’s Singaporean Retail and commercial banking business, Australian banking major ANZ has opened a further six new branches in the city state.
ANZ has undertaken an extensive rebranding of all existing branches and 19 ATM’s and says it has managed to moves its entire staff with minimal disruption.
The new operation in Singapore has 300,000 customers, spread across retail, commercial and institutional banking, and wealth management.
Singapore was one of the five countries in which ANZ acquired the commercial and retail banking operations of troubled UK banking giant RBS. ANZ also bought RBS operations in Hong Kong, Vietnam, Taiwan and the Philippines.
ANZ said it expects to complete a remaining acquisition in Indonesia in June.
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Law Firm Initiates Legal Action Over NAB CDO Exposure
According to a report in The Australian, Maurice Blackburn, the law firm which has initiated the largest ever class action law suit against Australian banks, has opened up a new front in its campaign to obtain damages for claimants.
The law firm alleges that NAB shareholders lost a collective $450 million, when the lender failed to disclose its exposure to collateralised Debt Obligations (CDO’s).
According to the law firm, NAB’s delay in writing down the value of its CDO investments caused a sharp decline in the value of its stock price during the global financial crisis.
Last week the firm announced that it had filed a lawsuit against 12 banks including NAB in a $5 billion class action law suit seeking damages over exception feed.
A spokesperson for the firm said on Monday that it would initiate new proceedings, specifically against NAB for failing to write down its $1.2 billion CDO portfolio in a timely manner, in a Melbourne Federal court within six weeks.
The spokesperson said that more than 120 institutional and retail shareholders had already joined the new class action suit.
Investors are claiming that the lender failed to reveal the extent of its exposure in 10 CDO’s of asset backed securities held with a unit of NAB, nabCapital.
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AXA Asia Pacific Holdings Says Open To New Bid From Jilted Suitor AMP
AXA Asia Pacific Holdings (APH), the target of an intense takeover battle between Australian banking major NAB and wealth manager AMP now says it is amenable to a new bid from jilted suitor AMP, which it would consider on its merits.
Last week, the Australian wealth manager said it had the flexibility needed to table a new bid for APH, but has yet to commit to a higher valuation than it has already put on the table.
Currently AMP values APH at $12.86 billion.
Rick Allert, chairman of APH, whilst speaking at the company’s annual general meeting on Tuesday said that any revised bid would be considered along normal lines.
“In the event that any new proposal is received from AMP, or anyone else for that matter, your independent directors will consider it on its merits subject to any legal restrictions under the current agreement with NAB and AXA SA,” Mr Allert told shareholders.
AMP’s rival for the acquisition of APH, NAB, had its higher valuation endorsed by APH’s independent board of directors, but was later rejected by the Australian Competition and Consumer Commission (ACCC) on the grounds it lessened competition grounds.
NAB says it is now considering all its options.
Mr. Allert added that he could not advise what the outcome would be, and it depended on the discussions and actions of the potential acquirers and regulators.
APH chief executive Andy Penn continued to make the point that the takeover battle had not become a distraction for the company.
“Our teams in Australia and New Zealand have been very focused on business as usual,” Mr. Penn told the meeting.
APH says it is optimistic about its future prospects, particularly due to the strength of the Asian economies, but added a note of caution, warning that economic and regulatory uncertainty continue to remain an issue.
“The outlook is very positive, however, the climate has changed in the wake of the global financial crisis and demand for regulatory change to address the perceived failings of the system has inevitably increased.” Mr. Penn said.
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NAB In Talks With Spain’s BBVA For Possible Joint Bid For RBS Branch Network
Australian banking major, National Australia Bank (NAB) is in negotiation with Spanish banking giant BBVA about the creation of a British banking joint venture.
The two lenders are front runners in the race to acquire a 300 strong branch banking network from troubled UK lender RBS for £1.5 billion.
The UK banking sector is widely expected to go through a round of consolidation, following the global financial crisis, though the current European sovereign default crisis may delay the timing of the consolidation some what.
NAB who currently owns two UK lenders, including the Clydesdale and Yorkshire Banks, is said to have made an approach to BBVA in order to cut some kind of deal.
A combination of NAB and BBVA could then be used as a platform to make further acquisitions in the British banking sector, as new targets come up for sale during the next few months.
If the two lenders to manage to reach an agreement, it would result as a head to head battle between the combined bidders, and the other Spanish banking giant Santander for the RBS branch network.
Santander has already acquired Abbey, Alliance & Leicester and some parts of Bradford & Bingley.
BBVA and Santander, are the two largest banks in Spain, and already fiercely compete with one another in their domestic market.
Santander is considered to be the favourite to acquire the RBS branch network, after Richard Branson’s Virgin Money dropped out from the bidding.
The European Commission has directed RBS to sell its branch network, as part of a penalty for being bailed out by the British government during the height of the crisis.
The branch network is being sold along with the brand name Williams & Glyn’s, which was the name of RBS’s branch network in England before its acquisition of NatWest in 2000.
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NAB Says No Option Being Ruled Out In Bid For AXA Asia Pacific Holdings
Australian banking major National Australia Bank says it is weighing up its options and will not rule any particular course of action out as it seeks to continue its bid for AXA Asia Pacific Holdings (APH).
“We haven’t ruled anything out,” an NAB spokesman said today.
The spokesperson made the statement in response to newspaper reports which had suggested that NAB chief executive Cameron Clyne had ruled out any legal action against the Australian Competition and Consumer Commission, whilst speaking to US institutional investors.
Last month, the ACCC delivered its verdict on two rival bids for APH, and ruled that it would oppose the NAB bid in its current form, whilst rulings that it did not oppose a bid from AMP.
“We have said that we are examining all our options and that is what we are doing,” the spokesman said.
The report added that Mr. Clyne during the same address told the investors that the lender had begun initial discussions with the ACCC on divesting an investment platform in order to win regulatory approval for its bid.
According to the spokesperson, any statements made to the bank’s institutional investors were briefings that occurred as a normal part of the lenders post results road show, but issued a clarification denying that the statements carried in reports were not made by Mr. Clyne.
The spokesman wouldn’t say if the bank had preliminary discussions with the ACCC about possible divestments.
NAB’s window of opportunity for a revised bid which has the blessing of the competition regulators is about six weeks. It has until the end of May to reach an agreement with the ACCC, before it begins to lose the support of both independent directors of APH, and its French parent AXA SA.
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Australian Car Loan Demand Continues To Slide
The slide in car finance declined during April as more mature buyers returned to car showrooms, despite the support, business applications continued to fall, after undergoing a spending spree at the end of last year.
Business credit inquiries dropped by 10 per cent, driving over all demand down by 4 per cent, compared with the same month in the previous year, the fourth consecutive monthly fall.
However private buyers, and in particular retirees returned to the market, helping to make up the difference according to new data released by Veda Auto Show
“Australians aged 65 and over are much more likely to purchase a car than the same time last year, with 11 per cent more credit applications in April,” said David Scognamiglio, the head of Veda Auto.
The decline during April was by far the smallest so far this year.
“This is a reasonable sign of recovery for personal automotive sales given that government incentives led demand in this sector 12 months ago,” Mr Scognamiglio said.
Despite demand rebounding amongst reitrees, younger buyers continue to form the core demand in the market.
“The 25 to 44 year-old demographic remains the most likely to purchase a car in the next six months, with 55 per cent of inquiries coming from this age group,” Mr Scognamiglio said.
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Half A Million Claimants Expected In Largest Ever Class Action Law Suit Against Australian Banks
Nearly 40,000 bank customers have signed up to what looks like Australia’s largest ever class action law suit, with the initiator of the legal action saying it believes it will register as many as half a million claimants in its law suit seeking reimbursement of “exorbitant” exception fees.
As of yesterday, Financial Redress launched as many as 12 class action suits against a number of banks for nearly $5 billion in fees levied over six years, the number of claimants was 38,378.
James Middleweek, who heads up Perth based subsidiary Financial Redress declined to specify exactly how many claimants had so far signed the funding agreement on the special purpose website.
Bernard Murphy, who is chairman of Melbourne based law firm Maurice Blackburn say that is would take as long as three to four weeks before the first writs could be filed.
“I expect it will be a strong fight (against the banks), but we are armed for the fight, we’re funded and ready to go.” Mr Murphy said at a press conference.
Fronting the claimants was Mr. Matthew Burgess, who says he was hit by as much as $1,000 in penalty fees by his bank Westpac over a two to three year period.
Mr. Burgess receives social security benefit on a fortnightly basis says the fees were incurred after his gym membership fees were deducted from an overdrawn account on a direct debit basis.
“I needed to attend the gym for health and medical reasons, and the fees impacted my ability to feed myself and keep my accommodation,” he said.
“Sometimes it was only a day or two before the account was replenished (with more funds). When I approached the bank, I was referred to my contract. I believe the bank was taking advantage of me. For me, it’s a social justice issue. It’s predatory behaviour by the banks and they need to be held accountable.”
Mr. Burgess added that he was unable to end his gym membership, and was effectively locked into a contract due to the punitive exit terms.
According to Financial Redress’s Mr. Murphy, the company had obtained advice from senior council over what it believes is a simple legal matter.
Mr. Murphy said that banks had the right to charge a reasonable amount for honour and dishonour fees on accounts that are overdrawn, and customers who exceed their credit limit, or make late payments on their credit cards.
“If it’s exorbitant, we win; if it’s not we close,” he said.
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NAB To Conduct Due Diligence On RBS Branch Network
Troubled British lender Royal Bank of Scotland, which is nearly 80 per cent owned by the UK government, has set a deadline for the middle of June to receive final bids for a 318 strong UK branch network that it has put up for sale, at the behest of the European Union.
According to a report in the Australian, which cited an unnamed source familiar with the negotiations, due diligence by the potential suitors including National Australia Bank (NAB) and Spain’s Banco Santander should take place within the next two or three weeks.
The source added that Spain’s Banco Bilbao Vizcaya Argentaria has also tabled a bid, but is using it more as means of obtaining more information on the UK banking market, which is expected to undergo serious consolidation during the next year, rather than as a serious bid.
A deal is widely expected before the year is out, whilst the actual transfer of the branch network will occur in 2011.
There are five companies which made initial bids, including Virgin Money, a financial services company owned by Richard Branson, and a consortium bid that includes private equity firm Blackstone Group, and the Wellcome Trust, a UK charity.
The bids range between £1.5 billion and£2 billion, and according to the unnamed sources, the bids have been rejected for being to low.
RBS is currently 83 per cent owned by the British government, and is selling a branch network that spans the UK under European Union guidelines for receiving a government bailout, the deal will include the accounts of some SME customers in the UK.
Combined, the branches have £23.6 billion in assets and 6000 employees.
RBS received the largest banking bailout in the world following its near collapse at the height of the global financial crisis in 2008.
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RBA Says Australia Has Enough Policy Flexibility To Deal With European Sovereign Default Crisis
Phillip Lowe, assistant governor at the Australian central bank says that the country has enough policy flexibility to be able to deal with any changes that occur to the global economy, but did warn that international investor concern over the state of public finances may start building.
Mr. Lowe made his remarks at an investor forum organized by Colonial First State, and added that he felt fairly optimistic about the Australian economy, since its major trading partners were experiencing strong growth.
Mr. Lowe went on to say that the main challenge was to increase supply within the economy “so that demand can grow solidly without adding to inflation”.
“At the same time, we need to be aware that circumstances can change quickly. If they do, Australia is in the fortunate position, as are a number of countries in Asia, of having the policy flexibility to be able to respond,” he said.
Mr. Lowe pointed out that risk from the European sovereign default crisis continues, and there remains the possibility that the problems faced by Greece which has gripped financial markets globally, may flare up again.
“Despite the recent announcements (by the International Monetary Fund and European Central Bank) having stabilised confidence in Europe, concerns about public finances could build again. If they did, it would weigh on growth prospects for the countries directly concerned, and it could also weigh on prospects in Asia, particularly if it were associated with a marked increase in risk-aversion globally,” he said.
“The Reserve Bank will be watching carefully over the weeks and months ahead to assess how the balance of these risks is evolving,” he added.
Mr. Lowe’s comments were the first made by a Reserve Bank of Australia official since the European sovereign default crisis reached its peak last weekend, at which point the stabilization fund measures undertaken to deal with the crisis by the European Central Bank and The International Monetary Fund came into effect.
Prior to the remarks by Mr. Lowe, the RBA’s official stance, was that contagion from the European sovereign default crisis, was mainly confined to Europe.
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30 Per Cent Jump In CBA Profits Fails To Impress Markets
Australian banking major posted a 30 per cent jump in third quarter cash earnings. Earnings rose to $1.5 billion driven by lower credit impairment charges, cost control measures, and larger volumes growth.
Despite the jump in profits, CBA said it remained cautious, highlighting a number potential headwinds during the second half, and whilst it has emerged recently that the business loan market has begun to thaw, CBA said that credit growth is still muted.
Analysts, who follow the stock, said they were not impressed with the result, because the underlying profit has trended downward during the quarter.
However the unaudited results were in line with estimates, and confirm the trend demonstrated by CBA’s rivals, some of whom have reported outstanding half yearly results recently.
The entire banking sector has benefited from a decline in credit impairment charges, as the Australian economy continues to show signs of recovery. However many executives at banks have expressed caution over the outlook for margins, and re-iterate the point that funding costs remain high.
Banking analysts are concerned about the prospects for significant loan growth.
CBA chief executive Ralph Norris said: “Whilst the economic outlook has progressively improved over the past 12 months or so, operating conditions remain challenging.
“Credit growth remains muted and margins continue to come under pressure from higher average funding costs and strong price competition. Whilst we have clearly passed the peak in the bad-debt cycle, key credit quality indicators remain at elevated levels and we continue to expect gradual, rather than dramatic, improvement.”
“Whilst the economic outlook is improving, short-term risks and uncertainties remain,” Mr Norris said. “Recovery from the global financial crisis will take time and there will be challenges along the way, evidenced by the current sovereign debt issues in the European Union,” he said.