Big four say Budget’s bank tax will benefit foreign-owned banks rather than Australian non-majors
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Big four say Budget’s bank tax will benefit foreign-owned banks rather than Australian non-majors
BREAKING: Just after this article was written HSBC announced they would be re-entering the broker channel in partnership with Aussie Home Loans
Foreign-owned banks will be the major beneficiaries of the new bank levy unveiled in last week’s Federal Budget, Australia’s major banks have warned. The 0.06% levy will apply to bank liabilities for banks with more than $100bn in liabilities and so would only affect the big four plus Macquarie. However, the majors warn that large foreign banks, rather than Australian non-majors, have been handed an advantage.
“The levy does not apply to overseas-owned multinational banks and therefore favours them at the expense of Australia’s own banks” argued CBA’s CEO Ian Narev, in the bank’s submission to the Treasury.
NAB warned that “a levy which disadvantages the Australian majors will either see activity migrate to global investment banks, who are the other major participants in the market (as opposed to smaller domestic ADIs).” ANZ recommended that the $100bn threshold apply to a bank’s global liabilities, which would affect Australian subsidiaries of major global banks.
The news comes as the UK and Hong Kong-listed bank HSBC prepares to enter the broker channel. The bank told MPA sister-title Australian Broker that their plans to re-enter the channel were “on track”, although the Australian Financial Review reported the bank wouldn’t start lending until late May and early June.
ING DIRECT are an example of a foreign-owned subsidiary bank that has broken into the Australian lending market. Launched in Australia in 1999, the bank wrote 2.29% of loans in AFG’s March 2017 Competition Index, almost as many as Macquarie Bank, who will be hit by the bank levy.
For customers of the major banks, it seems increasingly likely that rates will rise as a result of the bank tax. Analysts at Deloitte Access Economics have argued “at the margin, the new tax will increase the cost of borrowing for Australian businesses and households; Morgan Stanley the four majors would have to raise rates by up 20 basis points.
CBA, in its submission to the Treasury, noted that “the realities of running a business, whether small or large, are that higher costs are either passed on to customers through reduced service levels or higher pricing, or to shareholders through lower returns. There is no middle option to absorb costs.”
BREAKING: Just after this article was written HSBC announced they would be re-entering the broker channel in partnership with Aussie Home Loans
Foreign-owned banks will be the major beneficiaries of the new bank levy unveiled in last week’s Federal Budget, Australia’s major banks have warned. The 0.06% levy will apply to bank liabilities for banks with more than $100bn in liabilities and so would only affect the big four plus Macquarie. However, the majors warn that large foreign banks, rather than Australian non-majors, have been handed an advantage.
“The levy does not apply to overseas-owned multinational banks and therefore favours them at the expense of Australia’s own banks” argued CBA’s CEO Ian Narev, in the bank’s submission to the Treasury.
NAB warned that “a levy which disadvantages the Australian majors will either see activity migrate to global investment banks, who are the other major participants in the market (as opposed to smaller domestic ADIs).” ANZ recommended that the $100bn threshold apply to a bank’s global liabilities, which would affect Australian subsidiaries of major global banks.
The news comes as the UK and Hong Kong-listed bank HSBC prepares to enter the broker channel. The bank told MPA sister-title Australian Broker that their plans to re-enter the channel were “on track”, although the Australian Financial Review reported the bank wouldn’t start lending until late May and early June.
ING DIRECT are an example of a foreign-owned subsidiary bank that has broken into the Australian lending market. Launched in Australia in 1999, the bank wrote 2.29% of loans in AFG’s March 2017 Competition Index, almost as many as Macquarie Bank, who will be hit by the bank levy.
For customers of the major banks, it seems increasingly likely that rates will rise as a result of the bank tax. Analysts at Deloitte Access Economics have argued “at the margin, the new tax will increase the cost of borrowing for Australian businesses and households; Morgan Stanley the four majors would have to raise rates by up 20 basis points.
CBA, in its submission to the Treasury, noted that “the realities of running a business, whether small or large, are that higher costs are either passed on to customers through reduced service levels or higher pricing, or to shareholders through lower returns. There is no middle option to absorb costs.”
