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☆ Australia’s $2.5 trln pension stash is one to envy
▼ + stars: | 2023-07-26 | by ( Antony Currie | ) www.reuters.com time to read: +7 min

Sure, mining giant BHP (BHP.AX) has its headquarters in Australia’s second-most populous city, it’s a self-anointed coffee capital and boasts top-notch restaurants. Two other factors have capital-hungry institutions knocking on super funds’ doors. This is especially true of so-called industry funds that are mutually owned and initially catered to specific sectors such as higher education employees or hospitality workers. Daniel Andrews, premier of Victoria, has earmarked industry super funds as minority investors in a state-run plan to build renewable energy plants. Recent ructions in real estate have prompted some super funds to reassess whether the risk and complexity are justified.

Persons: dwarfing, AustralianSuper, California’s CalPERS, London’s, Paul Schroder, Hostplus, Anthony, Daniel Andrews, Breakingviews, outsized, Peter Thal Larsen, Thomas Shum Organizations: MELBOURNE, Reuters, Australian Stock Exchange, Association, Retirement, Canada, Plan Investment Board, Prudential Regulation Authority, APRA, Coal, IFM, Vienna Airport, KPMG, Reuters Graphics, Australian, Trust, Macquarie, Victorian State Department of, UniSuper, Sydney Airport, Victoria, Blackstone, CVC, Thomson Locations: Hong Kong, Melbourne, Australia’s, it’s, Australia, Heathrow, Edinburgh, Europe, United States, Indiana, New York, London

☆ Australian bank ANZ breaks from rivals by backing loan buffer
▼ + stars: | 2023-07-12 | by ( Byron Kaye | ) www.reuters.com time to read: +2 min

ANZ's three larger rivals have started considering lending without applying the 3% buffer, saying it is disadvantaging some borrowers. "Of course we should build in buffers," ANZ CEO Shayne Elliott told parliament in a regular hearing the country's main bank bosses are required to attend. Even first home buyers who bought soon before the rate hikes, the category most exposed to higher repayments, "are performing remarkably well", Elliott said. People coming off low fixed-rate mortgages, facing far higher variable rates, were "less stressed than the average customer," he added. ($1 = 1.4939 Australian dollars)Reporting by Byron Kaye; Editing by Stephen CoatesOur Standards: The Thomson Reuters Trust Principles.

Persons: Shayne Elliott, Elliott, They're, it's, Byron Kaye, Stephen Coates Organizations: SYDNEY, ANZ Group, Prudential Regulation Authority, APRA, ANZ, Thomson

☆ National Australia Bank to change home loan refinancing criteria
▼ + stars: | 2023-07-07 | by ( ) www.reuters.com time to read: +2 min

July 7 (Reuters) - National Australia Bank (NAB) (NAB.AX) on Friday said it would refresh its approach to like-for-like refinancing criteria to help customers who would otherwise fail to meet an industry standard that assesses their ability to repay loans. Last month, top lender Commonwealth Bank of Australia (CBA.AX) cut its buffer rate for some borrowers refinancing their existing home loan to 1% from the industry standard of 3%. After NAB, ANZ Group Holdings (ANZ.AX) is the only bank left among the top four to ease refinancing loans criteria for customers unable to meet APRA standard. NAB said the changes to its refinancing criteria will apply from July 21, but added that it will take a "case-by-case" approach when assessing appropriate serviceability. Reporting by Himanshi Akhand and Sameer Manekar in Bengaluru; Editing by Varun H KOur Standards: The Thomson Reuters Trust Principles.

Persons: Himanshi Akhand, Sameer Manekar, Varun Organizations: National Australia Bank, NAB, Reuters, The, Prudential Regulation Authority, APRA, Reserve Bank, Commonwealth Bank of Australia, Westpac Banking Corp, ANZ Group Holdings, ANZ, Thomson Locations: Bengaluru

☆ Australia regulator tells Medibank to set aside $167 mln after data breach
▼ + stars: | 2023-06-26 | by ( ) www.reuters.com time to read: +2 min

SYDNEY, June 27 (Reuters) - Australia's banking regulator told insurer Medibank (MPL.AX) on Tuesday it would have to set aside A$250 million ($167 million) in extra capital, citing weaknesses identified in its information security after a network intrusion. "In taking this action, APRA seeks to ensure that Medibank expedites its remediation programme," member Suzanne Smith said. In a statement, Medibank said it had sufficient existing capital to meet the capital adjustment and would continue to work together with APRA on remediation measures. The regulator will also conduct a targeted technology review of Medibank, with a focus on governance and risk culture. ($1 = 1.4981 Australian dollars)Reporting by Renju Jose in Sydney; Editing by Chris Reese and Lincoln FeastOur Standards: The Thomson Reuters Trust Principles.

Persons: Medibank, Suzanne Smith, Renju Jose, Chris Reese, Lincoln Organizations: SYDNEY, Australian Prudential, Regulation Authority, APRA, Thomson Locations: Australia, Sydney

☆ CBA lowers home loan buffer rates for some refinancing clients to 1%
▼ + stars: | 2023-06-21 | by ( ) www.reuters.com time to read: +2 min

June 21 (Reuters) - Commonwealth Bank of Australia (CBA.AX) on Wednesday cut its buffer rate for some borrowers refinancing their existing home loan to 1% from the industry standard of 3%, providing relief to many clients who would otherwise fail to qualify due to high interest rates. The country's prudential regulator advises lenders to refinance home loans only if they believe the customer could repay at 3% higher than current market rates. While CBA's alternate buffer is not in line with the regulator's recommendation, it does not break the serviceability buffer, the regulator said, as it allows exceptions to the policy but warns against high volumes. CBA has a quarter of the Australian mortgage market, where thousands of borrowers are expected to end their fixed rate loans this year, forcing them to shop around for new loans at current rates. "We know that due to the current interest rate environment some home owners are facing challenges refinancing their home loans so we are introducing an alternate interest rate serviceability buffer," CBA's Michael Baumann, executive general manager home buying said.

Persons: CBA's Michael Baumann, Sameer Manekar, Byron Kaye, Nivedita Organizations: Commonwealth Bank of Australia, prudential, CBA, Prudential Regulation Authority, Westpac Banking Corp, Reserve Bank of Australia, Thomson Locations: Bengaluru, Sydney

SYDNEY, June 2 (Reuters) - Australia's largest pension fund will pause use of the domestic unit of auditor PricewaterhouseCoopers (PwC) as the "big four" firm reels from a national scandal over its use of confidential government tax plans to drum up work with global clients. The roughly A$290 billion ($196.71 billion) fund, AustralianSuper, has frozen new contracts with PwC and expressed concerns about the scandal "at the highest level", according to a spokesperson. An audit contract worth A$1.6 million in 2022, will be reviewed this year, the spokesperson added. The Reserve Bank of Australia on Wednesday froze future work while Treasury and the Australian Prudential Regulatory Authority have hinted that the firm is blacklisted. The A$150 billion AwareSuper said the fund was working with PwC to determine whether tax advisers who had worked with the fund were implicated in the leak.

Persons: PwC, Lewis Jackson, Gerry Doyle Organizations: SYDNEY, PricewaterhouseCoopers, Reserve Bank of Australia, Wednesday, Treasury, Australian Prudential Regulatory Authority, Thomson Locations: Australia

SYDNEY, May 31 (Reuters) - The Reserve Bank of Australia will not sign any new contracts with PricewaterhouseCoopers (PwC) Australia until a scandal over the firm's misuse of confidential government tax plans is sorted out, the central bank's governor said on Wednesday. The "big four" firm is on the defense after a former Australian tax partner who was consulting with the government on laws to prevent corporate tax avoidance shared confidential drafts with colleagues to drum up business around the world. As of May 16, the government had committed to contracts worth A$255 million ($173 million) with PwC in the current financial year alone, a finance department official told a parliamentary hearing last week. "(We) have taken the decision to enter no new contracts with PwC until a satisfactory response has been forthcoming," Lowe said. APRA had also spoken with major Australian banks about their ties to PwC, as recently as last week, added Lonsdale.

Persons: Philip Lowe, " Lowe, John Lonsdale, Lonsdale, Steven Kennedy, Kristin Stubbins, PwC, Lewis Jackson, Sonali Paul Organizations: SYDNEY, Reserve Bank of Australia, PricewaterhouseCoopers, PwC, Prudential Regulation Authority, APRA, prudential, Thomson Locations: Australia, Australian

2 mortgage provider has told mortgage brokers that "if a customer is unable to meet serviceability under the standard assessment criteria", it might apply a modified serviceability assessment rate. Since the buffer is a guideline, banks are allowed to deviate from it. "APRA should consider officially lowering the serviceability buffer for refinancers." Representatives for Commonwealth Bank of Australia (CBA.AX) and ANZ Banking Group Ltd (ANZ.AX) were not immediately available for comment. ($1 = 1.4743 Australian dollars)Reporting by Byron Kaye and Lewis Jackson; Editing by Edwina GibbsOur Standards: The Thomson Reuters Trust Principles.

☆ Analysis: Australian banks' bid to shake mortgage reliance brings new risks
▼ + stars: | 2023-05-16 | by ( Byron Kaye | ) www.reuters.com time to read: +5 min

"When there's a macroeconomic downturn, it's generally institutional and business lending exposures that are impacted first," he added. For decades, Australian housing finance has significantly outpaced business lending, making home loan margins the engine of profits. A more recent exodus from non-lending retail services like financial advice has further weighted banks' allocation of capital to residential property. The big four banks said in earnings updates this month that their net interest margins peaked in late 2022 and have since narrowed. To hedge against interest rates risks, the Big Four may now chase new services-based revenues from commercial clients in non-lending segments, added Garland.

☆ Australia's key financial regulators to review global banking turmoil
▼ + stars: | 2023-03-28 | by ( Renju Jose | ) www.reuters.com time to read: +2 min

SYDNEY, March 28 (Reuters) - Australian Treasurer Jim Chalmers will convene a meeting of the country's top financial regulators to check how the latest volatility in global financial markets could affect the country, an official in the treasurer's office said on Tuesday. Australia's Council of Financial Regulators (CFR) will meet on Thursday after Chalmers discussed the latest market turmoil in phone calls with U.S. Treasury Secretary Janet Yellen on Tuesday and European Central Bank President Christine Lagarde overnight. "It's clear from my conversations that international authorities are prepared to do what's necessary to reassure markets at a time of uncertainty and volatility," Chalmers said in a statement. The discussions with key global financial officials come ahead of meetings of the World Bank and the International Monetary Fund in Washington, D.C. from April 10 to 16, which Chalmers is expected to attend. Coordinated action by global central banks and international financial authorities have helped ease some concerns but the volatility is contributing to uncertainty more generally in the global economic outlook, Chalmers said.

☆ Australia regulator seeks risk reports from banks on startups, crypto -report
▼ + stars: | 2023-03-22 | by ( ) www.reuters.com time to read: +1 min

SYDNEY, March 22 (Reuters) - Australia's prudential regulator has started asking the country's banks to declare their exposure to startups and crypto-focused ventures following the collapse of Silicon Valley Bank, according to the Australian Financial Review (AFR). The APRA declined to comment on the report but referred to its statement last week that it would intensify supervision of the local banking industry and seek more information on any potential impact from Silicon Valley Bank's collapse. ANZ Group Holdings (ANZ.AX) declined to comment, while Commonwealth Bank of Australia (CBA.AX), Westpac Banking Corp (WBC.AX) and National Australia Bank (NAB.AX) did not immediately respond to requests seeking comment. Treasurer Jim Chalmers last week said Australia was in a good position to withstand some of the market volatility because the country's banks were well capitalised, well regulated and had strong liquidity. Reporting by Renju Jose in Sydney; Editing by Jamie FreedOur Standards: The Thomson Reuters Trust Principles.

☆ Australian banking system cushioned for imminent climate change-related risks - regulator
▼ + stars: | 2022-11-30 | by ( ) www.reuters.com time to read: +2 min

Nov 30 (Reuters) - Potential economic downturns caused by climate change could pose risks to the loan books of Australia's top five banks without resulting in any severe stress to the system and the economy, a risk study conducted by the country's banking regulator showed. With global focus sharply pivoting towards climate change, banks have come under increased scrutiny for their ties with fossil fuel projects, prompting them to set goals to cut emissions and raise investments in clean energy projects. These banks have "predicted they would adjust their risk appetite and lending practices, such as cutting back on high loan-to-valuation lending and reducing exposure to higher risk regions and industries", the regulator said. APRA will now consider how the assessment could be applied to other regulated industries and climate-related challenges, it said. ($1 = 1.4948 Australian dollars)Reporting by Sameer Manekar and Tejaswi Marthi in Bengaluru; editing by Uttaresh.V and Subhranshu SahuOur Standards: The Thomson Reuters Trust Principles.

The banks are now less conservative in counting expected rental income when assessing loan applications, said the four sources. In September, about a third of new bank mortgage lending was for investment. On Nov. 12, NAB will also halve its discount on rental income to 10%, including for Airbnb-like short-term rentals, the sources said. NAB, Westpac and ANZ trail market leader Commonwealth Bank of Australia (CBA.AX), which has a quarter of the mortgage market. Commonwealth continues to apply a rental income discount of 20% on mortgage applications, a sixth source said.

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