ANZ to pass on 'as much cut as it can'

ANZ Banking Group Ltd's chief of Australian operations Brian Hartzer says the bank intends on pass on as much of an expected official rate cut as it can, given the current level of wholesale funding costs.

"We intend to pass on what we can," he said.

The Reserve Bank of Australia is next Tuesday expected to lower the official seven per cent cash rate, perhaps by up to half a percentage point.

Mr Hartzer said that the cost of funding for banks had escalated last week to 100 basis points above the 90-day bank bill and on Thursday was standing at 70 basis points over.

"Banks have lost so much faith in each that the interest rate spread banks are seeking to lend to each other is at a near all-time high," he told an American Chamber of Commerce in Australia function in Melbourne.

Mr Hartzer said there was "unbelievable fear in offshore markets" related to credit, which had made it difficult for the bank to source short term funding.

If the difficulties continued, it would flow on to credit lending in Australia.

Mr Hartzer said the Australian economy was in good shape.

However, due to the nation's large current account deficit - which stood at $12.774 billion in the June quarter - Australian banks have to borrow significant amounts of funds offshore.

 

Yeah, I reckon they'd need to suck up to the Australian public as hard as they could given their recent pathetic loss of control of their own lending practices.

 

They allays had and always will. I am not an expert but in the past we were told that the banks are getting money from Japan and Switzerland on very low % I think around 2% or so. The only thing witch changed latly is volume of the borrowers willing to get more money from the banks. This naturally drives profits down, hence – “credit cost goes up”
It gets me how during the financial crisis there is not much spin about countries latterly living from lending money to others. Ever wondered why?

 

It'll be interesting to see if they pass on the full cut...Time will tell...

 

Rick,

That's so true mate.

In the old days it was very hard to get a loan from ANZ.
In the 90's I remember them rejecting my application twice on a straight forward 20/80 lend and I don't consider myself a risk customer.

I don't know how it is now but until recently they would give a loan to just about anyone who applied.

I guess that attitude pretty much applies to all lenders.
They are all guilty of this. In fact when someone from a failed US lender was asked why they did it, he said: when the music starts, you gota dance.
Everyone was doing it, we did exactly what the bank across the road was doing.

cheers