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Banking & finance briefs: Four dates for May Wang, one sided Lombard hearing

Banking & finance briefs: Four dates for May Wang, one sided Lombard hearing

1. RBA comfortable with banks' offshore funding exposure - The Reserve Bank of Australia says Australian banks aren’t too heavily exposed to volatile overseas funding and are among the world’s best risk managers, The Australian reports.

The central bank's deputy governor Ric Battellino noted in a speech the country’s major banks had become increasingly reliant on offshore funding because the establishment of the superannuation industry in Australia over the past two decades had reduced the size of the retail deposit market. He said Aussie banks are among the most active users of international markets, accounting for nearly 40% of Australia's total foreign debt liabilities. But there are fewer than 10 AA-rated banks in the world, and four are Australian.

 "There's a natural tendency to believe that it is riskier for banks to borrow offshore than to lend offshore," Dr Battellino said.

"Events over the past few years have shown that one activity is not intrinsically more risky than the other. It's a matter of how the risks are managed.”

2. One sided - The potential for legal argument disappeared at a court hearing for Lombard directors who face Securities Commission charges when only one side showed up, Fairfax Media reports. Lawyers Stacey Shortall and Jane Standage appeared for the accused but no-one was at Wellington District Court yesterday to represent the Securities Commission. The case was stood down for a prosecution lawyer to be found.

3. Four dates for May Wang - Four dates over the next four weeks might end May Wang's attempt to buy a NZ$1.5 billion worth of dairy fams, Fairfax Media reports. Over the next four weeks Wang will face creditors who have been kept waiting for months, mark the next important step in her bid to buy the Crafar farms, and reappear in the Auckland High Court on bankruptcy proceedings and in the district court on record keeping charges.

The first of Ms Wang's showdowns looms next Monday with a creditors' meeting that was delayed by a week. Ms Wang yesterday bounced off another attempt by Westpac New Zealand to bankrupt her in the High Court in Auckland.

The case was adjourned until June 29 – date number two – to allow the creditors to look at her proposed 2c in the dollar offer to keep from going bankrupt. Westpac is owed $620,000, and the list of creditors more than $22 million from her property and hotel company Dynasty Group.

4. Macquarie's hefty dividend - Macquarie is facing criticism in Britain after receiving a £308 million dividend from Thamas Water which is seeking a major increase in customers’ bills, The Australian reports.

Former chief executive David Owens was forced to quit late last year after Thames Water's demands for rises of up to 16% above inflation over the next five years were rejected by Ofwat, the national water regulator. It was granted a 3% increase above inflation.

However, the crisis did not stop the London water utility paying its Australian parent one of the largest dividends in its history. It was calculated that the payment equated to £1 of every £5 paid in water bills.

5. NAB North deal may be close - IOOF Holdings Ltd may be close to agreeing on a deal with BNZ's parent National Australia Bank to buy Axa Asia Pacific Holdings Ltd.’s North investment platform business, the Australian Financial Review reported in its Street Talk column. NAB hopes a sale of the North business might see the Australian Competition and Consumer Commission overturn its decision to block NAB's proposed A$14 billion acquisition of Axa Asia-Pacific's Australian and New Zealand operations.

6. Spotlight on mortgage exit fees - Australian non-bank lenders might be breaking the law by charging borrowers exit fees of up to A$14,000 for repaying variable rate home loans early, The Age reports.

A research paper by the Melbourne Law School's Centre for Corporate Law and Securities Regulation said high exit fees could lock in borrowers and restrict competition.

The centre's director, and a report author, Ian Ramsay, called on the Australian Securities and Investments Commission to issue guidance to lenders about what made up a reasonable exit fee.

Lenders - apart from banks and credit unions - were found to charge, on average, A$1900 to repay a A$250,000 variable rate home loan, well above average exit fees of A$420 for credit unions and A$680 for large banks.

Lenders in the high-exit-fee category include non-deposit-taking lenders such as the successor to RAMS Home Loans, RHG, AIMS Home Loans, HomeStart Finance and Aussie.

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