Global rules will hurt: CBA
By Rachel Donkin | smh.com.au | 12 November
John Schubert, CBA Chairman.
The Commonwealth Bank's chairman, John Schubert, has warned that moves to toughen “already conservative” liquidity requirements could hamper the country's economic recovery and drive up costs for consumers.
Speaking at the bank's annual meeting in Perth yesterday, Mr Schubert said although “more work needs to be done” on the regulatory system, it made no sense to burden Australian institutions with unnecessary regulations based on the failures of their international counterparts.
“It's important that we do not follow a global 'one-size-fits-all' approach to the regulation of Australian financial services organisations which, unlike their global peers, have not failed,” he said.
Although the US and European financial systems went into meltdown and recovery there would be “slow and bumpy”, Australian banks had weathered the storm and come through the other side in a strong position, he said.
His comments were backed up by his chief executive, Ralph Norris, who said outside the meeting that applying a regulatory regime in Australia based on US and European markets was “probably not wise”.
“I think it's important we make regulation not on the hoof ... I think we need to be very careful that we don't end up with unintended consequences, which could be that the cost of credit increases and the amount of credit available decreases,” he said.
But the chairman of the Australian Prudential Regulation Authority, John Laker, said yesterday he continued to back global moves to introduce stronger liquidity standards in banks.
"APRA supports this objective," Mr Laker told a credit union conference. "Our own proposals to enhance liquidity risk management have been some time in gestation and have benefited from two years of 'learning by doing'," he said.
Wesfarmers' chief, Richard Goyder, used his company's annual meeting earlier this week to warn of the dangers of further rate rises before the economic recovery had time to take hold, but Mr Norris spoke out in support of the Reserve Bank position.
“I think it's been made very clear by the governor of the Reserve Bank that the 3 per cent setting was very much an emergency setting for what was expected to be a significantly tougher environment in Australia than it panned out to be,” he said.
“So it's fair to say that over the passage of the next 12 months the rate will probably get back to somewhere around 4.5 per cent — the Goldilocks setting, neither too hot (nor) too cold.”
But he refused to rule out further out-of-cycle rate rises. He said the Commonwealth would make decisions based on its funding costs, which were still rising.
First published by Smh.com.au on November 12 2009
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