Big four gain as foreign banks lose market share
By Lucy Battersby | thebigchair.com.au | 02 August
The Australian banks are raising more money, much of it through Government guarantee-backed corporate bonds, using the money to improve capital holdings and expand their businesses.
ANZ is expected to announce the purchase of Royal Bank of Scotland assets in Asia either today or later this week. Research from brokers Merrill Lynch shows lending from offshore banks declined for the sixth month in a row in June, even though overall lending in the Australian banking system increased in the same period.
Merrill Lynch banking analyst Matthew Davison said total lending portfolios at offshore banks had fallen by 8.9 per cent since December 2008, while overall lending improved by 2 per cent during the same period.
He wrote: ‘‘As a result, offshore banks’ share of total lending fell from 11.6 per cent in December 2008 to 10.3 per cent in June 2009.’’
Mr Davison also sounded a warning about ‘‘aggressive’’ competition between the banks for deposits. ‘‘The banks are merely competing among themselves for deposits, which does nothing for loan-to-deposit ratios and at the same time erodes sector returns,’’ he said.
The domestic banks, in particular the big four — Westpac, Commonwealth, NAB and ANZ — are raising more money than ever before on the international bond markets and are expected to sell about $32 billion each worth of bonds this year compared with about $25 billion worth in previous years, according to Fidelity International banking analyst James Abela.
All four have now improved their main capital ratios to at least 8 per cent and still enjoy a AAA credit rating.
The banks were not necessarily using the Government guarantee to sell all of their bonds, with $6 billion raised in the US last week without the guarantee and without a premium on top of the inter-bank lending rate, according to credit market analyst Philip Bayley.
‘‘Total offshore issuance for the month of July equates to more than $19 billion, the third largest month on record, but critically it takes total issuance for the year to date to more than $101 billion, well ahead of total issuance in 2008 of $95 billion,’’ Mr Bayley wrote in the DCM Review yesterday.
This came in the same week Reserve Bank governor Glenn Stevens said Australian banks accounted for 10 per cent of the money raised with the backing of a government guarantee globally and should wean themselves off the guarantee in coming months.
