Banks' exit leaves a big funding gap. Source: The Australian THE retreat of the European commercial banks has created a substantial gap in the domestic funding markets as Australian corporates look to refinance their maturing debt. According to the Reserve Bank, foreign banks held about $240 billion worth of domestic corporate debt as part of syndicated finance deals in the decade leading up to the start of the global financial crisis. However, a rush by the banks, especially European institutions, to return to their home markets after the downturn has left a funding gap of at least $34bn.
The departures from the Australian market have been led by major French banks Societe Generale and Credit Agricole, both hit hard by the European sovereign debt crisis. Canadian bank TD Securities also has left Australia, while Royal Bank of Scotland has dramatically scaled back its local balance sheet. "The Asian banks' share has increased to close to one-fifth. " Chinese banks are also growing participants in Australian debt deals. Deposit competition clouds RBA calls. Foreign bond holders will stick around: RBA. The Villain - Magazine. The left hates him. The right hates him even more. But Ben Bernanke saved the economy—and has navigated masterfully through the most trying of times.
Henry Leutwyler The U.S. Federal Reserve was founded 99 years ago, as a bulwark to the banking system and an antidote to its frequent runs and panics. Strictly speaking, it was America’s third attempt at a central bank. None of the invective heaped, of late, on Ben Bernanke would have come as a surprise to Biddle, and one doubts whether the Fed would fare much better with the electorate today than the Second Bank did in the 19th century. Over the past four and a half years, Bernanke, 58, has presided over the most sustained period of crisis of any civilian official in recent history, with the fate of millions of unemployed and underemployed Americans hanging in the balance. Bernanke’s unconventional programs have been implemented in two phases. Anti-Fed populism is in no way limited to the red states.
Pendulum Is Seen in Swing to Stocks. Having a bond moment. The death of bonds is being greatly exaggerated. I wanted to write this piece today to have a look at bond markets globally and what they might, or might not, be trying to tell us about the future not just of the economy but of assets more broadly. As the recovery in the US economy appears to be gaining traction the bond market has started to sell off a little and I am increasingly reading that the long run secular bond market rally is now at an end. Certainly with accomodative Fed policy and particulalry two rounds of quantitative easing it looks like a reasonable time to posit the rally is over. Indeed mathematically, like shorter maturity US Treasuries, the closer we get to zero the more likely it is we are nearing an end of the rally. But that does not mean that a massive bond market rout and sell off is necessarily in the offing. Let’s look at a few charts: The bond market just kept rallying on, no doubt driven by changes to central banking and a focus on maintaining inflation.
Yes indeed. Have a great day, Gregory McKenna. Www.ampcapital.com.au/K2DOCS/site_ampci/C3F8C012-2E07-4D84-9D4F-F691FDE64F6F/2012-Mar-21-Olivers-Insights-Global-recovery-watch.pdf?DIRECT. Aussie equities underperform global peers | AdviserVoice. PIMCO’s Gross sees lower bond returns. Investors reap rewards of lean times. Bina Brown Investors tired of watching stumbling share prices should take comfort from the rise in dividend payments among major listed companies. The latest round of dividend payments were up 7.9 per cent on the previous corresponding period as companies increased their payout ratios and earnings per share in an otherwise lacklustre reporting period, according to independent researcher Morningstar.
Increases in payout ratios for the six months ended December include BHP Billiton’s lift from 24 per cent to 29 per cent, Boral’s 57 per cent to 87 per cent and Cochlear’s 68 per cent to 85 per cent. The good news for shareholders is that the trend towards increasing dividends is likely to continue as companies grapple to maintain investor interest and shareholder support, says Morningstar’s head of equities strategy, Ross Bird. “Capital growth is limited so companies have to find another way of rewarding shareholders, and increasing dividends is a way of doing that,” says Bird. Telstra Westpac. Queensland massacres Labor. From left, new treasurer Tim Nicholls, premier-elect Campbell Newman and deputy Jeff Seeney meet for the first time on Sunday. Photo: Glenn Hunt Mark Ludlow and Geoff Kitney Queensland’s premier-elect, Campbell Newman, plans to join with the other conservative states to “fight for the common cause” against federal Labor on issues such as the carbon tax and the mining levy.
The Liberal National Party’s crushing election victory – it won a likely 78 seats in the 89-seat Parliament and reduced Labor to just seven MPs – redraws the balance of federal-state power relations. Labor has been left with only two premiers on the Council of Australian Governments. “What we want to do is stand up for the things that matter,” Mr Newman told The Australian Financial Review.
Mr Newman has already signalled his intentions to join with the conservative bloc of governments, such as the resource-rich state of Western Australia, in their bid for a larger share of tax revenue for the fast-growing state. Proceed with carbon tax at your peril: Newman. Prime Minister Julia Gillard has been told to “think again” about Labor’s incoming carbon tax after the state party was demolished by voters at the Queensland election.
New Queensland Premier and Liberal National Party leader Campbell Newman issued the warning on Tuesday after a new opinion poll showed federal Labor had fallen further into the electoral doldrums. The man who led the LNP to a stunning majority at Saturday’s election said the carbon tax was extremely unpopular with Queenslanders and implied that the antipathy was reflected across the country. “They proceed with this at their peril,” he told Fairfax radio. “They really do need to look at what has happened up here. “On the carbon tax, I strongly recommend that they think again.” The $23 a tonne tax on the carbon emissions of the nation’s big polluters comes into force on July 1 and consumers and business are worried about the flow-on impacts, especially for electricity prices, as those emitters feed the cost through.
Victoria axes emissions target. CLIMATE SPECTATOR: Carbon target scrapheap | Andrew Herington. Costello to audit Qld finances. RBA more upbeat on world economy. The RBA acknowledged that Australia’s banks were still grappling with high funding costs, although the central bank said these institutions had made significant inroads into their expected wholesale funding needs, which put them in a better position to cope with any renewed funding strains. Photo: Peter Braig John Kehoe and Michael Dwyer Households are shifting their investments from shares to cash in a bid to avoid risky assets. The share of directly held equities in household financial assets is 9 per cent – almost half its pre-global financial crisis level, the Reserve Bank of Australia said. Net outflows from households’ directly held equities amount to $50 billion since 2008, while deposits increased by about $210 billion. A similar shift has occurred in superannuation funds’ asset allocations.
The RBA said the motivation behind the savings rate of just under 10 per cent came in part from a desire to bolster wealth, given the weakness in some asset markets in recent years. Europe needs ‘mother of all firewalls’: OECD. Trichet gives insight into crisis. Crying out for nanny rebate. Symantec pulls out of Huawei venture. Huawei has already laid off several workers in Huawei Symantec’s Silicon Valley offices this month and plans to move its entire operation out of the United States, largely because of increased American government oversight. Photo: Bloomberg Beijing has criticised Canberra for “obstructing” the operations of Chinese firms in Australia, after telecoms giant Huawei was banned from bidding for the national broadband network on security grounds. The Chinese group, founded by a former People’s Liberation Army engineer, has in the past also run foul of US regulators and politicians on concerns it is closely connected to the Chinese military and to Beijing.
“We hope competent authorities of Australia will provide a level and indiscriminate market environment for Chinese companies instead of wearing coloured glasses and obstructing Chinese companies’ normal operations in Australia in the name of security,” said foreign ministry spokesman Hong Lei. WESTPAC Grounded by winds of change. Westpac tech chief comes out swinging. Westpac’s new chief information officer Clive Whincup . . . priority was on the customer side. Paul Smith Westpac Banking group’s new technology chief says that, despite the spate of redundancies in his department, the bank is forging ahead with ambitious IT plans and is determined to right a market perception that it has been left languishing in the wake of Commonwealth Bank of Australia’s headline-grabbing core banking modernisation program. In his first interview since taking the technology reins at Westpac in December, chief information officer Clive Whincup told The Australian Financial Review that Westpac had taken an opposite approach to CBA with its plans to upgrade its technology capabilities and put in place new customer facing systems, ahead of a core systems replacement project.
It had focused on areas such as online systems, a new contact centre application, data centre infrastructure and new mobile banking platforms, before replacing the core. Mobile banking pays small merchants. The new PayPal Here card reader plugs into a smartphone. Photo: Simon Cardwell Jessica Gardner Payment services providers are targeting small businesses with new mobile banking technology. In the past fortnight, online payment provider PayPal unveiled a credit and debit card reader that can be fitted to a smartphone, while National Australia Bank announced a mobile-optimised version of its web-based merchant service NAB Transact that will allow merchants to take credit card payments via mobile phones and tablets.
Research from PayPal found that 50 per cent of micro-businesses (those with four employees or fewer) already used their smartphones for business tasks, such as email, calendar and maps. The new PayPal Here card reader is a triangular device that plugs into the phone’s headphone jack. PayPal is confident that small business owners such as tradespeople, personal trainers, tutors or massage therapists will show interest in the new technology. Note to job seekers: close your Facebook. Illustration: Karl Hilzinger Brian Corrigan Recruiters, lawyers and academics say job seekers should resist a worrying trend for potential employers to demand Facebook account details for a pre-hire peek into their personal lives. The social networking giant, which has more than 845 million members, has issued a warning that such demands are a violation of privacy and could leave organisations open to legal liabilities including discrimination claims.
The issue arose following reports in the US last week that more and more employers were asking candidates to supply login details, insisting that they “friend” somebody in the HR department or open their Facebook page during an interview. “It’s a topic everybody is talking about and clients are definitely using Facebook to look up potential recruits as part of the hiring process,” Andy Cross, managing director of specialist recruitment company Ambition Technology, tells The Australian Financial Review. BoQ plans $450m raising, flags $91m loss. BOQ shares take a leap after capital raising. BOQ shares have not touched these levels since early December.
Photo: Glenn Hunt BANK of Queensland's small investors might have been short-sheeted by the terms of the company's $450 million capital raising - but they are hardly likely to complain much after the shares bolted ahead when they resumed trading yesterday. The issue's bleary-eyed underwriters at Citigroup wrapped up the institutional component of the raising yesterday, allowing the shares to be relisted for the first time since last week.
Insider was (once again) proved wrong about the conditions being ripe for short-covering because Bank of Queensland's issue was priced at $6.05 and it closed last week at $7.30 a share. Instead, the shares leapt to a high of $7.74, before closing slightly easier at $7.65 - but still a whopping 26 per cent premium to the price being paid for new stock. Advertisement PaperlinX angst continues Insider reckons Marchant ought to keep his focus on trying to turn around a waterlogged ship. Shareholders suffer in BoQ's highly dilutive $450m equity raising. New boy starts revolution at Bank of Queensland. Size of Bank of Queensland's capital raising a surprise. BOQ protected against future shocks. BANK of Queensland (BOQ) says it is now protected from future shocks to its balance sheet after more than doubling its bad debt provisions and flagging a first half net loss.
BOQ today said impairment costs on loans will be $328 million for the six months to February, up from $134 million in the same period in the previous year. That will lead to a $91 million loss for the first half, down from a $48 million profit in the previous corresponding period. The bank's board declared a fully franked interim dividend of 26 cents per share and said this has been approved by the prudential regulator. Since the 2011 floods, Queensland's economy has been "quite variable'', causing heavy falls in property valuations and a 30 per cent surge in BOQ's non-performing loans, managing director and chief executive Stuart Grimshaw said. That led the bank to make specific provisions for impaired loans of $166 million after it cut valuations on impaired property assets mostly located in South-East Queensland.
Anger at Goldman still simmers. JetStar HK. Rio, BHP Lose Faith in Diamonds Even as Prices Rise: Commodities. Rio Tinto Group (RIO) and BHP Billiton Ltd. (BHP) are looking to exit the diamond industry even as prices head for a fourth year of gains, because they see little prospect of repeating the dominance they hold in iron ore. Rio is considering options for its diamond mines because they may no longer fit with strategy and they don’t have the required scale, the London-based company said yesterday.
BHP Billiton Ltd. has sought bids for its diamond assets. BHP and Rio, which together accounted for about 16 percent of global diamond production by value in 2010, have failed to match the output of industry leaders De Beers and OAO Alrosa of Russia. That contrasts with the position in iron ore, where along with Brazil’s Vale SA, they have a market share of about 63 percent, according to estimates from Bloomberg Industries. “They can’t get the scale they want,” said Ed Sterck, an analyst at BMO Capital Markets. Botswana Gems Canada, Zimbabwe Harry Winston Diamond Corp. ‘Lacks Scale’ Diamonds: no longer Rio’s best friend.
Rio Tinto tipped to float diamond business. Rio Tinto may move to replicate its aluminium divestment plans by breaking off and floating its diamond business, while retaining some sweet spots, analysts speculate in the wake of the major's intentions to focus on its lucrative iron ore portfolio. Rio revealed yesterday it was re-evaluating its diamond business, echoing rival BHP Billiton's November announcement its diamond business was also under review. I can't see anyone really rushing to buy a diamond mine in Zimbabwe at the moment. The bundle, float and spin technique was used by BHP Billiton when it transformed its former steel business unit into two standalone spinoffs, BlueScope Steel and Onesteel, about 10 years ago. In this case BHP Billiton has already started selling off its diamond interests separately, starting last year with its majority stake in the Chidliak diamond project on Baffin Island to Peregrine Diamonds for $9 million.
Advertisement "It's all about opportunity cost and for management," he said. Drug companies. Future budgets offer super reasons for wholehearted tax reform. Super: retail outshines industry funds. Super funds won’t yield on strategy. Big banks kiss ‘glory days’ goodbye. BNP joins attack on ‘cult of equities’