Day 481: 'A toxic mix '
Counting the days since the banking royal commission was established.
Good afternoon, and welcome to day 481.
Today in summary: CBA is under pressure to confirm whether reports the bank will axe 10,000 jobs are accurate, ASIC’s latest Innovation Hub surveys shows fintech businesses are booming; and IOOF has been hit with a class action alleging the embattled wealth company misled shareholders to inflate share prices.
-- Alex
@AlexESampson
Current banker panic level: 😰😎🤑
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The Finance Sector Union of Australia has called on CBA chief executive Matt Comyn to confirm whether reports the bank will axe 10,000 jobs are accurate. The Australian today revealed a “secret plan” to cut jobs to save about A$2 billion, saying the bank wanted to keep the move under wraps until after the May 18 election. The bank has neither confirmed nor denied the reports. Margin Call is speculating the bank is trying to “please profit-focused investors”. A CBA spokesperson told theAustralian Financial Review “we don’t comment on market speculation”. The last major bank redundancy round was in 2006 when NAB announced it would cut 6,000 jobs.
ASIC’s latest Innovation Hub survey shows fintech businesses are continuing to see growth in demand. The hub was developed to foster innovation that could benefit consumers by helping Australian fintech startups navigate the corporate regulator’s system.
ASIC’s third survey on of the marketplace lending industry and its first survey of Australia’s crowd-sourced funding (CSF) sector — two key fintech business models — revealed marketplace lending borrowing increased 45% to A$433 million and CSF offers raised a net total of approximately A$7.04 million during the survey period.
The Australian Financial Review is reporting that IOOF has been hit with a class action alleging the embattled wealth company misled shareholders. Law firm Quinn Emanuel will make the case against IOOF super trustees in the NSW Supreme Court, alleging IOOF caused shareholders to pay an inflated price for the company's shares. The action will argue IOOF knew of the breaches but failed to act.
Quinn Emanuel partner Damian Scattini said:
“Management at IOOF must have known that its conduct was risky — legally and reputationally. Yet they persisted and the board let it pass. The reckoning that began at the royal commission now goes to the next stage, with the filing of this class action.”
This comes after APRA last year decided to take IOOF and its chief executive, chairman, chief financial officer, general counsel and company secretary to court. The APRA case is schedule to appear in court in July. This has delayed ANZ’s divestment of its OnePath pension and investment business, sparking questions of whether it will go ahead at all.
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Today’s burn prize: Finance Sector Union national secretary Julia Angrisano
“The CBA is a highly profitable company which relies on its staff to deliver financial services to its large customer base and Matt Comyn is on the wrong track if he thinks shutting down branches and sacking staff will enhance the bank’s reputation in the community and increase profits.”
Angrisano wrote to CBA boss Matt Comyn calling on him to confirm whether reports in The Australian today that the bank will axe 10,000 jobs are accurate.
The Commentariat
The Australian’s business correspondent Richard Gluyas writes that in the lead up to Federal election there’s a “desperate hunger” for stability among the business community. He points to yesterday’s woeful half-year result from Bank of Queensland which put into question the long-term sustainability of Australia’s regional banks. Suncorp chief executive Michael Cameron told Gluyas he would like to see the ACCC granted a seat on the Council of Financial Regulators to provide competition oversight of the banking sector, an element that falls outside the mandate of ASIC and APRA.
“BoQ’s malaise, which will invite more speculation about the intentions of Queensland rival Suncorp, reflects a toxic mix of industry-wide problems, challenges that confront the regional banking model such as embedded higher funding costs, as well as sheer mismanagement.”
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