Australia’s ‘big four’ banks are expected to shrug off the need for a government guarantee on debt as they attempt to assure investors and ratings agencies that they can stand on their own two feet.
According to a report in The Australian Financial Review, the bank’s preference for unguaranteed issuance will give the government further reason to pull down the safeguard.
However, the eventual withdrawal currently depends on the regional and international banks ability to access funding.
Treasurer Wayne Swan said the government’s decision to withdraw the scheme will hinge on what other countries around the world are doing as well as market conditions.
Mr Swan said the government hopes the scheme will become redundant as banks find it cheaper to sell unguaranteed bonds.
Earlier this month ME Bank became the first lender to re-enter the residential mortgage backed securities market without government support.
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