Day 471: Budget confirms $606m for Hayne response
Special Budget edition
Good afternoon, and welcome to day 471.
Today in summary: The government confirms A$606.7 million in budget funding over five years to deliver its response to the Hayne royal commission; NAB defies its experience with the royal commission by picking up mortgage market share; and APRA consults on the ‘fit and proper’ test for newbie owners in the financial sector.
-- Charis
Current banker panic level: 🤔😡😟
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As already flagged, regulators ASIC and APRA will receive an additional A$550 million over five years, confirmed tonight in Treasurer Josh Frydenberg’s maiden budget. The majority of the funding has however been pushed out into the latter years, as the government forecast a surplus of A$7.1 billion next financial year. The government will also provide an additional A$2.8 million for the Australian Financial Complaints Authority to help it deal with complaints dating back to 2008, and A$2.6 million to design a “compensation scheme of last resort” that the banks will be expected to fund.
NAB may have been the hardest hit of the big four by the Hayne royal commission to date, but that doesn’t seem to be hurting its ability to close mortgage deals. Credit Suisse analysis of APRA data shows while all the major banks (led by ANZ and Westpac) are losing home loan market share to their smaller peers, NAB grew its home loans by 4.4% in the past year.
APRA is consulting on its new ‘fit and proper’ test for major shareholders in new financial institutions with assets under A$200 million. Last year the relevant Act was amended to streamline the process, meaning owners with more than 20% equity would no longer be assessed under the national interest framework. APRA is now asking for feedback on the cost of compliance. Submissions close May 27.
Today’s burn prize: Seek chief executive Andrew Bassat
🔥🔥🔥
“With regard to the royal commission, there is perception and reality.”
The Seek CEO isn’t worried about the impact of the Hayne royal commission on his new COO, former CBA head Ian Narev.
The Commentariat
Small business owners are bound to be underwhelmed by the Budget measures the government has introduced to justify its claim that it is "backing" small businesses to prosper, writes the AFR’s Karen Maley.
“Bankers, it seems, continue to live in fear that they could be called up as witnesses at a subsequent royal commission, and be forced to justify how on earth they could have agreed to lend money to small businesses which subsequently collapsed.”
The suggestion by APRA’s Wayne Byres that banker bonuses be based on an even balance of financial and non-financial considerations is breathtakingly naive, write Ownership Matters directors Dean Paatsch and Martin Lawrence in the AFR.
“Unless APRA has found a formula for director courage, we suspect there will be few meaningful penalties for appalling failures of customers and shareholders under a model dependent on director discretion.”