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Banks becoming more selective, says ANZ

Banks becoming more selective, says ANZ

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Date Published : Thursday, September 25, 2008

Despite confidence in the Australian banking system coming relatively unscathed through the global credit crunch, many institutions have become more cautious in their lending.

That is the observation of Mike Smith, chief executive of ANZ Bank, who told The Australian that local banks are preserving their own safety by taking a tighter approach.

Conditions in financial markets have become more precarious for even the stronger institutions, with funding costs increasing. This has a knock-on effect on loans and mortgages as many banks are forced to pass on the hikes to borrowers.

Demand for credit has dampened, Mr Smith said, but that will not stop smaller banks from taking more care in choosing to whom they should give their money.

"I suspect that the banks will be more selective," he predicted. "I think what will happen is that the quality will have to improve."

On a wider scale, Mr Smith was pessimistic about the prospects for the banking sector should the US renege on the plans to bail out Wall Street.

He also said that ANZ's Asian expansion had been slower than he would have preferred, though he revealed its operations in the region had been up 40 per cent on last year.

In related news, the bank has revealed that if given the opportunity it could take advantage of the US government's rescue package.

Reuters claims that ANZ and NAB are considering the situation, though Westpac has said it does not need any such assistance.

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