Day 452: 'No realistic option'
Counting the days since the banking royal commission was established.
Good afternoon, and welcome to day 452.
Today in summary: The terms of reference for the APRA capability review have been released, the Commonwealth Bank announced it was halting plans to divest its wealth management and mortgage broking business; and KPMG Australia is buying Ferrier Hodgson.
-- Alex
@AlexESampson
Current banker panic level: 😐🤥😎
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1. The terms of reference for the APRA capability review are out here. Submissions are due by April 10. The objectives of the review are to assess APRA’s capability to deliver upon its statutory mandate under the APRA Act and relevant industry acts, as well as undertaking a “forward-looking assessment” of APRA’s ability to respond to an environment of “growing complexity and emerging risks for APRA’s regulated sectors”. It will also identify recommendations to enhance APRA’s future capability.
2. The Commonwealth Bank today announced it was pausing plans to divest its wealth management and mortgage broking business for the time being, but with a view to eventually sell it off, once it has dealt with the recommendations of the royal commission. CBA first announced its planned demerger in June 2018, intending to sell mortgage broking businesses Aussie Home Loans and Colonial First State, as well as financial advice subsidiaries Count Financial and Financial Wisdom.
CBA has also said it would look to sell its general insurance business. CBA’s update follows the release last week of the bank’s full response to implementing the recommendations from the royal commission and and Tuesday's announcement from Treasurer Josh Frydenberg that the government would not ban mortgage brokers from receiving trailing commissions.
3. Professional services firm KPMG Australia has announced it will buy corporate recovery, advisory, forensic accounting and IT firm Ferrier Hodgson, aiming to create what they believe will be one of Australia's largest restructuring and forensic advisory businesses. The deal is expected to strengthen the level of service KPMG could offer in its restructuring and forensic advisory work.
KPMG Australia chief executive Gary Wingrove said:
“The rationale for the merger was compelling, with KPMG and Ferrier Hodgson a great fit strategically and culturally.”
Today’s burn prize: Madeleine King MP
🔥🔥🔥
“Why is the Assistant Treasurer now focussed on setting the agenda, when he’s got three parliamentary sitting days left to implement it?
King blasted Stuart Robert in a statement today, saying his address at the National Consumer Congress in Melbourne, which set set out the government’s “vision” for consumer affairs, was a bit rich given Labor had been calling on the Coalition to pass vital reforms on payday lending and consumer leases since 2015. King said: “The only vision Stuart Robert has is tunnel vision in protecting his payday loan shark chums at the expense of Australian consumers.”
The Commentariat
Business columnist Stephen Bartholomeusz writes in the Sydney Morning Herald that the Commonwealth Bank had “no realistic option” but to pause its plan to divest its remaining wealth management and broking businesses. Bartholomeusz argues CBA chief Matt Comyn and his board really had no choice given they are bogged down in costly remediation programs for misconduct.
“Offering its shareholders shares in a new company with new leadership, grappling with the legacy issues from its past while having to absorb the recommendations of the financial services royal commission, might have distanced the wealth management business and its issues from the bank, but dumped them and the associated uncertainties on its shareholders.”
Chanticleer writes that APRA is finally talking tough and targeting slack super trustees after the prudential regulator announced yesterday that “trustees that fail to live up to their obligations will have very few places to hide”.
“This tough new stance is welcome but it is about 10 years overdue. It took the Hayne royal commission to shake the prudential regulator out of its complacency in relation to enforcement of the existing law.”
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