Falling credit risks as bad debts rise for the banks

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The cost to insure against a credit default is falling for the Aussie banks, at the same time as bad debts are rising, reports Bloomberg. “Credit default swaps for the country’s four biggest lenders fell to 97 basis points on average on Thursday, a level unseen since Jan. 25, according to data compiled by Bloomberg. The premium over similar U.S. bank instruments also shrank to just 20 basis points from as much as 50 in February.” Credit reporting agency, Fitch Ratings, said in a recent report that Australian banks were responding to global uncertainties by reducing risk and focussing on domestic lending. This can be seen in ANZ’s recent decision to scale back lending in Asia, and NAB’s demerger of Clydesdale Bank. (Image credit: Bloomberg) (VIEW LINK)


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