The recent announcement that Westpac is “reviewing” ownership of its New Zealand business caused some speculation the decision might be due to the bank’s lower profitability. But this would be unlikely grounds for a sale, and was more a consequence of COVID-19’s impact than anything.
In fact, Westpac’s New Zealand profits should be considerably higher this year close to NZ$1 billion, as opposed to the $550 million in the previous year (to September 30 2020). Based on past experience, a sale price of $10 billion (AU$9 billion) would not be unreasonable, possibly even higher.
More likely, the proposed sale is due to the complex and conflicting regulatory requirements of the Australian and New Zealand banking supervisors. We saw this in the decision of the New Zealand supervisor, the Reserve Bank of New Zealand (RBNZ), to require banks to be positioned for “open bank resolution” (OBR).
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As the nation plots its economic recovery from the pandemic, from vaccine rollouts to financial support for struggling sectors, it seems the right time to also examine the policies of the Reserve Bank of Australia.
Reserve Bank governor Philip Lowe.
Credit:
As
The Age reported on Tuesday, ALP Treasury spokesman Jim Chalmers has joined a growing group of influential economists who have called for a review into the bankâs operations in the light of its failure to meet its primary function of keeping inflation between 2 per cent and 3 per cent a year.
The target range is written into an agreement between the RBA and the federal Treasurer, but the current bank governor, Philip Lowe, has not delivered on this KPI. Consumer price inflation fell below 2 per cent in 2014 and has climbed back into the target range only on a couple of occasions since.
Reserve Bank of Australia Holds Cash Rate Amid Red Hot Housing Market
The Reserve Bank of Australia (RBA) has said it would continue to “carefully” monitor trends in housing borrowing after announcing it will hold the cash rate at the current record low 0.1 percent.
Following the bank’s monthly meeting, RBA Governor Philip Lowe noted Australia’s economic recovery was much stronger than initially expected.
However, despite the housing market experiencing the fastest price growth in 32 years, Lowe reiterated that the bank would not raise interest rates until sustainable inflation reached 2 to 3 percent.
“Housing markets have strengthened further, with prices rising in most markets,” Lowe said. “Housing credit growth to owner-occupiers has picked up, with strong demand from first-home buyers.”
Apr 07 2021, 9:26 PM
April 07 2021, 9:30 AM
April 07 2021, 9:26 PM
(Bloomberg) Bond sales by two of Europeâs most indebted nations have been inundated by demand as an economic recovery begins to lift yields from historically low levels.
(Bloomberg) Bond sales by two of Europeâs most indebted nations have been inundated by demand as an economic recovery begins to lift yields from historically low levels.
Italy received more than 64 billion euros ($76 billion) of bids for its first new 50-year bond in almost five years via banks on Wednesday, according to a person familiar with the matter. Thatâs more than three times the previous record. The nation is also selling debt maturing in 2028.
Skyrocketing house prices a vexed issue for RBA skynews.com.au - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from skynews.com.au Daily Mail and Mail on Sunday newspapers.