Three more banks could face investor concern over flawed mortgage outsourcing deals with Perpetual Ltd that give rise to confusion over who has the legal authority to complete the transactions.

An analyst says that Perpetual could lose as much as 10 per cent of its revenue if all three banks, National Australia Bank, AMP Bank Ltd and Bendigo and Adelaide Bank - in addition to ANZ Banking Group Ltd - drop their business with the fund manager over the flawed contracts.

Perpetual on Monday confirmed that National Australia Bank’s (NAB) HomeSide mortgage lending unit, AMP Bank and Bendigo and Adelaide Bank Bank outsourced the processing of mortgage applications to its mortgage services business.

Credit Suisse analyst Arjan Van Veen said in the unlikely event the banks broke their outsourcing contracts with Perpetual over the issue, Perpetual’s total revenue would drop by 10 per cent.
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The last two of the big four banks have stepped into line with their peers and matched the interest rate rise by the Reserve Bank of Australia (RBA).

Both National Australia Bank Ltd (NAB) and Westpac Banking Corp announced on Wednesday they would lift their standard variable rate on home loans by the same extent as the RBA’s quarter of a percentage point increase on the cash rate.

NAB also said its strategy of matching the RBA previously has led its mortgage volumes to soar.

Group executive personal banking Lisa Gray defended the bank’s retail strategy of maintaining low interest rates and cutting fees, saying NAB had experienced a surge in mortgage applications in February.
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The ANZ Bank, Commonwealth Bank and ING Direct have been named as finalists for the Mortgage and Finance Association of Australia’s (MFAA) prestigious Lender of the Year Award, in the 2010 MFAA Excellence Awards.

The annual Award - to be announced at the MFAA Excellence Award’s night-of-nights on 12 March - is one of the industry’s most sought after honours.

To reflect the importance the MFAA places on monitoring lenders’ service performance in relation to the broker channel, MFAA accredited members were invited to vote online for the Lender of the Year in January 2010.

To ensure this is simply not a ‘popularity vote’, each lender was ranked against a set of seven criteria by all eligible voters. The top three scoring lenders became the finalists, and the overall top scoring Lender, the winner, will be announced at the Excellence Awards Dinner at the Westin in Sydney on Friday 12 March 2010.
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Business confidence declined in December as Australian firms absorbed a series of official interest rate rises by the central bank and trading conditions tightened, a survey shows.

But Australia’s economy is on track to register economic growth of up to one per cent in the fourth quarter of 2009, which would take the annual rate to one per cent, according to the latest National Australia Bank (NBA) monthly business survey.

NAB’s business confidence index declined by 11 index points to plus-eight points in December.

The confidence of firms in the mining and construction improved but there were broad based falls in the retail, wholesale, finance, transport and recreation sectors.

Meanwhile, the business conditions index was unchanged at plus-10 index points in December.
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National Bank of Australia Ltd (NAB) has raised its variable mortgage rate by the same amount as the central bank, as it attempts to lure customers away from rivals and particularly Westpac Banking Corporation.

NAB said in a statement on Thursday that it would increase its standard variable home loan rate by 25 basis points, to 6.49 per cent, effective from Friday December 4.

By constrast, Westpac on Tuesday raised its variable home loan rate by 45 basis points to 6.76 per cent, effective from Friday December 4. The increase was almost double the increase in the cash rate announced earlier that day by the Reserve Bank of Australia (RBA).

The RBA increased the cash rate by 25 basis points to 3.75 per cent, its first ever third consecutive monthly increase since it began announcing rate increases in 1990.
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National Australia Bank Ltd (NAB) has reported a 6.6 per cent fall in its total credit exposures during 2008/09.

NAB’s total credit exposures dropped by 6.6 per cent to $630.022 billion at September 30, from $675 billion a year earlier.

The September quarter credit exposures were 3.8 per cent lower than those reported by NAB at its half year 2009 result as at March 31.

The bank’s announcement on Thursday completed the risk and capital disclosures by Australia’s major banks under internationally accepted reporting standards, Pillar 3 of Basel II.

Basel II is the name given to the capital adequacy framework for authorised deposit-taking institutions (ADIs) that adopt more advanced risk management approaches.
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National Australia Bank Ltd (NAB) chief executive Cameron Clyne says the bank’s decision to abolish penalty and other exception fees on some of its accounts has started to improve the bank’s reputation.

But Mr Clyne said the negative perception of NAB was the result of the bank’s past actions and there was a long way to go to improve its image.

Mr Clyne also said there needed to be debate in Australia about how to become less reliant on offshore funding, something he described as the great weakness of the economy.

“One of the goals I set for myself was improving the reputation of the bank,” Mr Clyne said at an Australia-Israel Chamber of Commerce lunch on Monday.

“The first thing we set out to do was deal with fees.
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National Australia Bank Ltd (NAB) chief executive Cameron Clyne is watching the changes taking place in the UK financial sector before deciding whether his bank will expand in or exit that market.

The European Commission is forcing UK banking giants Lloyds Banking Group and Royal Bank of Scotland to divest significant parts of their businesses in exchange for government aid, to ensure that they don’t distort the market.

“There is now some talk about the UK market changing,” Mr Clyne said at an Australia-Israel Chamber of Commerce lunch on Monday.

“At the moment it remains speculative but we’re watching it very closely and are very keen to see how it develops.

“We’ve got one of two routes (in the UK) which is to expand or get out.”
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National Australia Bank Ltd chief executive Cameron Clyne has taken home a 76 per cent hike in total remuneration to $5.2 million compared with when he ran the bank’s New Zealand operations but is still paid only about two-thirds of his predecessor at the top job.

By contrast, Mr Clyne’s more experienced predecessor John Stewart pocketed $8.513 million in total remuneration last year.

Mr Clyne received a cash salary of $2.3 million, short-term incentive cash payments of $812,500, options valued at $1.17 million, shares worth $784,400 and non-monetary fixed compensation worth $18,580, according to the bank’s annual report issue on Monday,

Mr Clyne took over the top job at NAB from Mr Stewart on January 1 this year.
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Soaring business conditions have raised the prospect of a further interest-rate rise when the Reserve Bank of Australia (RBA) board meets in December.

Money markets are pricing in a 75 per cent chance of another 25-basis-point increase in the cash rate, following the two quarter-point moves in October and December.

The National Australia Bank’s business survey for October released on Tuesday showed the index for business conditions jumped nine points to 12, its highest level in 21 months.

ANZ senior economist Shane Lee said the data added “significant weight to the arguments of those who expect the RBA to tighten next month”.

The sharp jump in conditions narrows the gap to what appeared to be over-exuberant confidence levels that businesses have been feeling in recent months.
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By Jill Fraser

Speaking to Lending Central about his push to benchmark the cost of banks’ wholesale funding Yellow Brick Road chairman, Mark Bouris said that the four majors’ recent move to increase their fixed rate is a worrying sign.

“That tells you they’re taking the view that cost of funds is going to increase tremendously next year,” he said.

Bouris has been maintaining for some time that an industry benchmark should be introduced to track the cost of banks’ wholesale funding.

Last week NAB Chief Executive Cameron Clyne backed Bouris’ proposal.

Bouris spoke to Lending Central about his concept.

LC: What benefits would be derived from publishing a benchmark funding rate for banks?
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Australia’s big four banks, which control about 85 per cent of the mortgage market, have wasted no time in matching the central bank’s interest rate rise with 25 basis point increases to variable home loan rates.

ANZ Banking Group Ltd was first off the mark after the Reserve Bank of Australia’s (RBA) announcement, saying in a statement on Tuesday that its standard variable home loan rate will rise to 6.31 per cent as of Monday November 9.

The Melbourne-based bank will also raise interest rates on a range of deposit products by 35 basis points and rates for credit cards and business lending will increase by 0.25 of a percentage point.

“Funding costs remain high and despite improvements in credit markets the average cost of wholesale funding is increasing which is continuing to place considerable pressure on mortgage margins,” ANZ chief executive for Australia Graham Hedges said in the statement.
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National Australia Bank today confirmed it had completed the acquisition of Challenger Mortgage Management and unveiled a new brand for the business - Advantedge. The PLAN, Choice and FAST aggregator brands remain.

Executive General Manager of NAB Partnerships, Matt Lawler, said NAB Personal Banking had created a new division called NAB Partnerships, within which Advantedge and NAB Broker will sit, to build partnerships with professionals across the mortgage broking, financial planning and mortgage management industries.

“The creation of NAB Partnerships and the acquisition of Advantedge marks the completion of an important milestone for NAB Personal Banking,” Mr Lawler said.

“NAB Partnerships provides us with a great platform to build relationships with brokers, mortgage managers and financial planners by providing them with a comprehensive range of services that help them grow their businesses.
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National Australia Bank Ltd (NAB) chief executive Cameron Clyne says he can’t guarantee future increases in lending rates won’t exceed those made by the Reserve Bank of Australia (RBA).

“The commitment we give is that we’ll be competitive,” Mr Clyne said on Wednesday, after revealing the bank’s full year profit tumbled by 42.9 per cent.

Rival lender ANZ Banking Group recently promised not to slug its 800,000 home borrowers with variable interest rate rises above official moves by the RBA.

The pledge, made in a newspaper interview, followed repeated warnings by Treasurer Wayne Swan that loan rate increases out of step with the central bank could not be justified in the current economic climate.
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All eyes will be on asset quality, margins and surplus capital as signs that the bad debt cycle has peaked and margins are set to expand as interest rates rise, when the big banks begin to report their annual results this week.

All of Australia’s big banks are now cashed-up with strong balance sheets after a raft of capital raisings over the last 12 months.

The raisings were in reaction to escalating bad debts, losses from toxic conduit assets and funding pressures in the wake of tight credit markets.

While analysts differ over whether bad debts will peak in the September 2009 half or in early 2010, all point to surplus capital that may be returned to shareholders during 2009/10 if a large bad debt buffer is no longer needed.
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