The Australian government said yesterday that the country’s banks were sound after news that major lender ANZ had increased provisions for bad debt led to a plunge in bank stocks.
Treasurer Wayne Swan called a press conference after shares in ANZ, the country’s third-largest lender, fell over 10 percent following its trading update yesterday, which also warned annual profit could fall by 25 percent.
The news led to a slide in other major bank stocks too, with Swan saying Australia was “not immune from developments” on global markets, which have been hit by a credit crunch and slowing world growth after a US financial crisis.
But Swan said he did not believe there was more bad news to come after regulators told him the country’s banks had made full disclosure of their exposure to bad debt.
“We shouldn’t lose sight of the fact we do have a strong, well-regulated banking sector capable of withstanding the fall-out from international developments,” he said.
ANZ shares slumped 10.93 percent to their lowest close since September 2001 at A$15.81 after the bank said its provision for second-half losses was A$1.2 billion (US$1.1 billion), against the first half’s A$980 million.
Other banks were also down, with Commonwealth Bank losing about 5 percent to A$41.10, National Australia Bank falling 2.86 percent to A$25.80 and Westpac dropping just under 8 percent to A$20.33.
NAB said on Friday it would set aside an extra A$830 million to cover losses, in addition to a charge of A$181 million the country’s second-biggest bank had taken previously.
ANZ said its underlying business was still solid but that it faced global credit problems, a weak New Zealand economy and a softening Australian economy.
Chief executive Mike Smith said ANZ expected a cash profit of more than A$3 billion this year, but added in a conference call that having to announce the provisions was “beyond disappointing.”
“No chief executive likes to announce news like this. Our shareholders, our staff and our customers have a right to expect better,” he said, ahead of the completion of a review of ANZ’s securities lending business due next month.
Swan said bank executives needed to take responsibility for their decisions.
“What we are dealing with here today in terms of the ANZ and their chief executive has made it very clear, is that we are living with the consequences of some poor investment decisions that in fact go back years,” he said.
Reserve Bank of Australia assistant governor Guy Debelle said banks had been taking steps to raise cash by issuing bonds as a precaution against further global credit market turmoil.
“The major banks are generally ahead on their funding plans,” he said.
A default crisis in subprime US mortgages erupted last year. It led to huge losses in securities whose value is linked to the home loans, sparking a global credit crunch and slower world economic growth.
AIR DEFENSE: The Norwegian missile system has proved highly effective in Ukraine in its war against Russia, and the US has recommended it for Taiwan, an expert said The Norwegian Advanced Surface-to-Air Missile Systems (NASAMS) Taiwan ordered from the US would be installed in strategically important positions in Taipei and New Taipei City to guard the region, the Ministry of National Defense said in statement yesterday. The air defense system would be deployed in Taipei’s Songshan District (松山) and New Taipei City’s Tamsui District (淡水), the ministry said, adding that the systems could be delivered as soon as the end of this year. The US Defense Security Cooperation Agency has previously said that three NASAMS would be sold to Taiwan. The weapons are part of the 17th US arms sale to
INSURRECTION: The NSB said it found evidence the CCP was seeking snipers in Taiwan to target members of the military and foreign organizations in the event of an invasion The number of Chinese spies prosecuted in Taiwan has grown threefold over a four-year period, the National Security Bureau (NSB) said in a report released yesterday. In 2021 and 2022, 16 and 10 spies were prosecuted respectively, but that number grew to 64 last year, it said, adding that the Chinese Communist Party (CCP) was working with gangs in Taiwan to develop a network of armed spies. Spies in Taiwan have on behalf of the CCP used a variety of channels and methods to infiltrate all sectors of the country, and recruited Taiwanese to cooperate in developing organizations and obtaining sensitive information
BREAKTHROUGH: The US is making chips on par in yield and quality with Taiwan, despite people saying that it could not happen, the official said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has begun producing advanced 4-nanometer (nm) chips for US customers in Arizona, US Secretary of Commerce Gina Raimondo said, a milestone in the semiconductor efforts of the administration of US President Joe Biden. In November last year, the commerce department finalized a US$6.6 billion grant to TSMC’s US unit for semiconductor production in Phoenix, Arizona. “For the first time ever in our country’s history, we are making leading edge 4-nanometer chips on American soil, American workers — on par in yield and quality with Taiwan,” Raimondo said, adding that production had begun in recent
Seven hundred and sixty-four foreigners were arrested last year for acting as money mules for criminals, with many entering Taiwan on a tourist visa for all-expenses-paid trips, the Criminal Investigation Bureau (CIB) said on Saturday. Although from Jan. 1 to Dec. 26 last year, 26,478 people were arrested for working as money mules, the bureau said it was particularly concerned about those entering the country as tourists or migrant workers who help criminals and scammers pick up or transfer illegally obtained money. In a report, officials divided the money mules into two groups, the first of which are foreigners, mainly from Malaysia
RSS