In April 2016 I published an article on the myriad of problems in Australian financial services that ASIC had failed to address. The article was written shortly after the announcement that ASIC’s then head, Greg Medcraft, was being given an eighteen-month extension to his initial five-year term. Show More
The article below is Narrow Road Capital's submission to the current APRA consultation process on bank capital levels. APRA has rightly recommended that the major Australian banks need to hold more tier 2 capital to ensure that their capital position is unquestionably strong. For the sake of a few basis... Show More
Ten years on from the Global Financial Crisis and the threat of another financial crisis in the medium term is now a solid possibility. There are signs of weakening economic growth in China and the US, with Europe and Japan showing no signs of getting out of their long term... Show More
In my column today I write that RBA governor Phil Lowe needs to pull his head in. It's fine for him to tell the banks to loosen their lending standards, but he isn't the one being sued by ASIC on the basis of an entirely fallacious interpretation of Labor's 2009... Show More
The announcement of the Australian Business Securitisation Fund (ABSF) this month has been derided as a political stunt by a few observers. However, if managed correctly it could (i) reduce the cost of borrowing for small and medium businesses and (ii) earn the Federal Government a decent return on its... Show More
This week I kick-along the debate about ScoMo's unprecedented proposal to fund $2 billion of SME loans, which I helped design, and examine how investors have whacked Aussie bank and insurer subordinated bonds as if there has been a mini-GFC as a result of a widely misinterpreted APRA discussion paper,... Show More
APRA has released an important new consultation paper on the regulator's approach to ensuring the major banks have sufficient "Total Loss Absorbing Capacity" (or TLAC). I have written at length about this in the AFR here (or AFR subs can click here). Show More
Moody's believes APRA's new proposals for the reporting of capital ratios could end up being credit positive for the Aussie banks, arguing that "both options would be credit positive because each would improve the comparability of Australian banks' capitalisation to global peers". I wrote about this in the AFR on... Show More
In the AFR today I reveal that the regulator's latest stress-tests of Australia's 13 largest banks show a vast improvement over the results of the 2014 stress-test when some banks' common equity tier one (CET1) capital ratios fell below 5%, triggering the conversion of their hybrid securities into equity. In... Show More
With the increase in the American overnight rate and long term bond yields questions are starting to be asked about whether the federal government debt load is sustainable. As interest rates increase, so does the interest bill. Neither major political party seems to care, they have taken turns at making... Show More
APRA have finally come out with their capital rules to fulfil the ‘unquestionably strong’ requirement of the Financial Services Inquiry. The focus is on is the Common Equity Tier 1 ratio requirement (CET1), which is the amount of equity the banks need to hold relative to risk weighted assets (loans).... Show More
“It’s a tough market actually, really tough… There is an oversupply, particularly in the apparel sector, from the foreign retail entrants entering the Australian marketplace” Richard Umbers, CEO, Myer Show More
On Friday the 9th June, the AFR ran an excellent article on the new breed of superannuation funds hitting the Australian market place, most of whom are targeted towards Gen-Y and millennials, Australia’s most populous generation. “Inside the multi-billion dollar battle for Millennials’ super”, which you can access here, looked... Show More
The Federal budget announcement that deductions for travel costs and certain depreciation allowances will no longer be available to landlords of residential property is a potential game-changer for residential property. These changes, combined with other changes to curb foreign buyer demand, are relatively small in terms of their market impact.... Show More
With residential property prices starting to misfire, we reached out to three experienced property investors for their perspectives on the market. We posed the question: “What do investors need to watch for in coming months, and why?” Read on below as to why you need to keep a hawk’s eye... Show More
Expectations for Australian residential property prices have been tempered recently by Governor Lowe’s presentation, data including soft wages growth and slower price growth, and the proposed bank levy. Given this backdrop, Livewire reached out to three experts for their perspectives on the market, asking: What data point, or event, in... Show More
In The Australian Financial Review today I reveal that Sydney house prices fell modestly by -0.1% in April for the first time since December 2015, validating our call last week that the housing boom is grinding to a stand-still. Auction clearance rates have also declined for 3 weeks running with... Show More
The declaration two weeks ago by the Australian Prudential Regulation Authority (“APRA”) that it was taking further steps to slow the growth of bank provided “interest only” loans in residential property is to be welcomed. However, it represents a reactionary policy that does not target either an appropriate pricing framework... Show More
In The AFR I argue that the big banks are absolutely justified in hiking home loan rates after APRA's recent decisions, and are definitely doing the RBA's dirty work for it on the liability side of the household balance-sheet by helping cauterise financial stability risks. The mere fact that the... Show More
In The AFR I present new research from Goldman Sachs that shows the US Federal Reserve is currently well "behind the inflation curve"---with a Taylor Rule advocated by Chair Yellen herself implying interest rates are already 100bps-300bps too low---which, based on the experience of the 1960s and 1970s, can have... Show More