Volatility in mortgages tipped. Lenders keep an eye on Europe. Banks go on buying spree of state debt. Mining construction up, housing falls - macrobusiness.com.au | macrobusiness.com.au. The AIG released their December Performance of Construction Index (PCI) to complete the avalanche of local data this morning. Overall, the index lifted 1.4 points to 41 indicating improvement, but in aggregate this is still a contraction across the entire sector (a reading below 50 is contraction). Here are the key findings: The easing in the rate of decline was largely attributed to the boost in engineering construction (51.3) thanks to increasing work from the resource sector. While commercial construction (32.8) and apartment building (33.3) declined at a slower rate in December, house building fell 5.7 points to 32.9.
It seems the more up to date construction figures bely the November home sales stat’s announced by the HIA earlier this morning. AIG Director Public Policy, Peter Burn, said: Following on from his comments earlier today, HIA Chief Economist, Harley Dale, said: Debt crisis: as it happened, January 9, 2011.
Euroland euphoria on Mario Draghi bank rescue. This subtle form of 'credit-easing' includes a cut in the reserve requirement to free up €100bn in lending power, and looser rules to allow collateral-starved banks to pawn more of their loan books at the Frankfurt lending window. "Draghi's been smart," said Simon Ward, of Henderson Global Investors. "The spread available to banks is going to prove attractive.
He has outmanoeuvred the Bundesbank by drawing it in deeper. " Yet it is unclear whether liquidity alone can stop investor flight from Club Med. European banks have already cut holdings of EMU bonds by €65bn this year, and are slashing loan books to meet the EU's core Tier 1 capital ratio of 9pc. "This may help sovereign debt a bit but we don't think it is a game-changer," said Mark Schofield, rates chief at Citigroup, predicting that banks will use the money to plug other holes and cover a dollar funding squeeze. The ultimate disaster could be even worse if it all goes wrong. There was less optimism across the border. AUD Falls on European Debt Concern. Australia’s dollar fell for the first time in three days versus its U.S. counterpart as Spain and Italy prepared to auction debt this week amid concern their credit ratings may be cut as Europe’s debt crisis worsens.
The Aussie also declined versus the yen after Fitch Ratings said Italy faces a “significant chance” of a downgrade, sapping demand for riskier assets. New Zealand’s dollar, nicknamed the kiwi, fell as much as 0.2 percent against the greenback as stocks declined amid speculation France’s credit rating may be lowered. “Australia and New Zealand are not immune to what’s happening in the euro zone,” said Lee Wai Tuck, a strategist at Forecast Pte in Singapore. “They’re likely to come under pressure” against the U.S. dollar, he said. Australia’s dollar declined as much as 0.5 percent to $1.0263 before trading at $1.0298 at 12:48 p.m. in New York, down 0.2 percent. New Zealand’s currency was little changed at 79.47 U.S. cents after earlier dropping to 79.25 cents. Ratings Reviews. Fitch on France & Italy. Hailstorm claims look set to dent IAG stock.
Picture: Jonathan Bong Source: Supplied Source: The Australian MAJOR insurer IAG is expected to come under pressure this week as equity investors wait to see the likely impact of Melbourne's Christmas Day hailstorm. IAG has a similar share of the Melbourne home insurance market to Suncorp, which last week revealed that the storm was a big factor in an expected $120 million-$180m hit to its bottom line for the six months to December 31. Suncorp, whose main brand in Victoria is AAMI, revealed late last week that the hailstorm looked likely to cost it between $200m-$250m, although some of that is covered by a $240m natural hazard reinsurance allowance it had for the period.
The damage bill from the storm, which ravaged parts of Melbourne's northern suburbs such as Eltham, Taylors Lakes, Greensborough and Keilor with hailstones the size of golfballs, had initially been estimated at about $100m. QBE appears relatively unscathed by that event because of the wider global spread of its operations. Melbourne's Christmas Day hailstorm proves costly for Suncorp. Finland losing its credit cred FINLAND’S top-notch AAA credit rating has been downgraded by another agency, a blow to a country considered the most creditworthy in Europe.
Extreme tactics to sell property LIGHTS, camera, auction? Estate agents are going to extreme lengths to sell properties, putting their acting skills to the test. Watch the videos here. Want a six-hour working day? IMAGINE working six hours on full pay. QBE expects significant drop in profit | Finance | BigPond News. QBE at 8-year low. . Source: Herald Sun INVESTORS smashed insurance giant QBE by sending shares plummeting to an eight-year low after the company warned profits could be halved as a result of the huge increase in natural disasters last year.
Australia's biggest insurance company yesterday experienced its largest share price drop in more than 10 years, wiping almost $2 billion off the value of the company. QBE blamed catastrophes including floods in Thailand, bushfires in Western Australia, and Victoria's Christmas Day storms for the 40-50 per cent reduction in its 2011 profit from last year's $US1.28 billion. Analysts had been forecasting a 7 per cent rise in annual profit. QBE chief executive Frank O'Halloran said the result was "extremely disappointing". "The record level of catastrophes is something we didn't budget for and I don't think anyone in the industry budgeted for," he said. But analysts said it would take some time for the insurer to regain the market's confidence. QBE expects 40% drop in profits after tax. ANZ kicks off banks' job cuts.
ANZ to cut ‘many hundreds’ of jobs. RBS to slash another 3,500 jobs. By Emma HaslettThursday, 12 January 2012 RBS has announced that it’s planning to slash another 3,500 jobs, on top of the 2,000 cuts it made late last year. The job losses will be part of heavy restructuring at its investment banking arm, which will be split into two new divisions: markets, and wholesale; shrinking the investment side to 13,400, from 19,000 before the financial crisis. Of course, this limits the risk for taxpayers, which own 83% of the company. But considering the investment bank has been one of RBS’ main growth engines over the past three years, could CEO Stephen Hester be accused of bowing to political pressures? Admittedly, the two remaining divisions will play to RBS’ strengths: while the markets arm will focus on the debt, currency and money markets (where the bank has done fairly well over the past few years), the wholesale banking side will manage assets for the bank’s largest clients.
Hester insists not. Which makes sense. ANZ to slash hundreds of jobs. ANZ says it has no plans to announce job cuts today, but concedes cost cutting is on the agenda. Photo: Rob Homer ANZ Bank is expected to slash hundreds of Australian jobs in the first half of the year, as it seeks to cut costs in a weaker lending environment. Officials from the Finance Sector Union were briefed on the looming job losses this morning, with the cuts expected within six months. BusinessDay understands about 700 staff in back-office roles may be affected. One source within the bank placed the figure closer to 1000, "although the specific numbers could be slightly higher or lower". "This latest program is being done by stealth," said the employee, who asked not to be named.
Advertisement "There is no formal communications within ANZ of this: just top-down targets given to each area to deliver," he said. The ANZ rate update, disclosed a short time ago, left the bank's standard variable mortgage rate unchanged at 7.3 per cent a year. 'No plans' for announcement today. RBS to slash 3,500 jobs worldwide - World. Updated Fri 13 Jan 2012, 3:29pm AEDT Nearly 200 jobs at the Australian arm of the Royal Bank of Scotland could go after the UK bank announced another major round of job cuts. RBS will cut about 3,500 jobs worldwide in the next three years as the group shrinks its investment banking activities as part of a major overhaul. The bank employs 600 people at its Australian operations and around 170 of those jobs are under threat.
The bank, which is 82 per cent state owned after it was bailed out by UK taxpayers during the financial crisis, plans to sell or close three local businesses including its stockbroking and takeovers divisions. Australian management is confident the units will be sold rather than closed, and says there is strong interest from local and foreign buyers. But banking analysts have told the ABC the businesses will be hard to sell because there is a large number of investment banking assets on the market around the around the world. "Enough is enough. Royal Bank of Scotland's plan to slash global operation to hit Australian unit. In London, chief executive Stephen Hester last night announced the the bank was considering "sale or closure options for our cash equities, corporate broking, equity capital markets, and mergers and acquisitions businesses" around the world.
He said the global operations had income of pound stg. 220 million in the nine months to last September and were unprofitable. "We are in discussions with a number of potential buyers, though there is no assurance of a sale concluding," he said. RBS is understood to be hoping to sell off its Asia-Pacific business, of which Australia contributes between 27 per cent and 32 per cent of revenue, in one line, wrapping Australia in with Asia to get the best price for an asset in a geographical region widely agreed to have some of the best economic upside in the globe. RBS Australia employs about 600 staff, of whom all but about 170 would expect to have their divisions sold or closed.