Good afternoon, and welcome to day 563.
Today in summary: Westpac is the only big bank to hold back some of both the June and July interest rate cuts; Hostplus and Club Super are in discussions about a merger; Allianz is launching a voice-controlled app that acts as a digital assistant; and ASIC has released a consultation paper proposing to relax requirements for foreign banks operating in Australia.
-- Alex
@AlexESampson
Current banker panic level: 😰🤝👩🏻💻🤗
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Westpac is the only big bank to hold back some of both the June and July interest rate cuts. ANZ, which only passed on 0.18% in June, yesterday jumped at the chance to pass on the full rate cut to its variable interest rate home loan customers.
Last month CBA and NAB passed on the full cut, but this month only passed on 0.19% each for standard variable rate home loans.
NAB acting chief executive Phil Chronican whined that it was becoming “practically impossible” for banks to offset falling interest rates on loans by cutting the returns they offered depositors. Chronican said the economic impact of rate cuts was dampened when borrowing costs were already very low and pointed instead to the need for other policy reforms — something RBA governor Philip Lowe also made a point of.
AFR | The Australian| SMH
Hostplus and Club Super have announced they are in discussions about a merger. The superannuation funds have entered into a memorandum of understanding to formally pursue discussions and conduct due diligence.
KPMG’s February superannuation fund merger insights report found that in the past year, increasing numbers of Australian superannuation funds had initiated informal and formal merger discussions. Merger discussions were likely to further increase in 2019 as both the regulatory and political landscape continued to shift in favour of consolidation, KPMG found.
Allianz Workers Compensation is launching a voice-controlled app that acts as a digital assistant for people that have been injured at work. “Claims Companion by Genie” was created in partnership with Victoria’s Deakin University as an industry-first product to revolutionise the way an injured worker interacted with, and understood, the claims process.
The move reflects the popularity of robo-advice platforms in the financial services sector. Troubled wealth group IOOF, which is this week in court defending itself against claims it did not act in customers’ best interests, last month signalled it wanted to branch into digital and robo advice to reduce costs and add flexibility for customers.
The Allianz app will be rolled out on a three-month trial basis to an initial core group, including Sydney Water, the NSW Department of Finance, Services and Innovation and TAFE NSW.
ASIC has released a consultation paper proposing to provide licensing relief for foreign financial services providers operating in Australia.
Foreign fintechs, neobanks and banks have complained that Australia’s regulations are too strict to support growth from internationals, with some being put off entering the market altogether.
The consultation paper sets out ASIC’s proposal to exempt foreign providers from the requirement to hold an Australian Financial Services licence. This may apply to players such as UK fintech Revolut, which has been relying on an offshore e-money license to kick off its Australian operations.
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Today’s burn prize: Richard Holden, professor of economics at UNSW Business School
“I think the cuts from the RBA have come far too late.”
Holden argued there would have been a much better chance of reviving the economy had the RBA pursued rate cuts “some time ago”, claiming there was now “a real chance” of a recession in the next 18 months.
The Commentariat
Governments need to kill Facebook's digital currency, or make its regulation tight enough to limit any systemic implications, argues Stephen Bartholomeusz in the SMH.
“Financial information is essentially just data and Facebook and its partners should be able to grow Libra’s user base and exploit both its data and that within their existing networks for profit, if they are left to do so as loosely checked and regulated as big tech companies like Facebook and Google are today.”
An RBA rate rest is needed to let other policies do the heavy lifting, writes UTS Business School industry professor Warren Hogan in the AFR.
“There is considerable momentum for lower interest rate, largely emanating from financial markets. After a short, sharp adjustment to the stance of monetary policy, the Reserve Bank should now sit back and watch how it all plays out before considering their next move.”
Phil Lowe is done with rate cuts for now, writes AFR banking and finance columnist Karen Maley.
“Provided the economy is heading in the right direction – with the unemployment rate moving steadily lower and encouraging a pick-up in wages growth – Lowe is likely to take the view that patience is the best approach.”
ASIC’s plan to put psychologists in boardrooms is no benign measure, argues columnist Janet Albrechtsen in The Australian. She posits it actually represents the medicalisation of society and everything that’s wrong with corporate Australia.
“Instead of putting a shrink in a boardroom to measure board culture and oversight of management, paste Hayne’s six principles to the door of every boardroom. That will do more to fix a broken corporate culture than dozens of highly paid, degree-laden psychologists roaming corporate Australia for work.”
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