Powered by MOMENTUM MEDIA
SUBSCRIBE TO OUR NEWSLETTER SIGN UP
Powered by MOMENTUM MEDIA

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.

Second-tier banks disapprove guarantee change

Staff Reporter 4 minute read

Australia’s second-tier lenders have criticised the government’s proposal to level the fee structure of the wholesale funding guarantee.

The Bank of Queensland (BoQ) chief financial officer Ram Kangathran said the new structure would disadvantage the banks that expanded their lending portfolios during the financial crisis.

BoQ is currently lobbying the government for the removal of the insurance premium charged on past borrowings, so as not to disadvantage those second-tier banks that made use of the original wholesale funding guarantee.

Mr Kangathran told The Australian Financial Review that the government proposal disadvantages those institutions that cut back on lending during the GFC. He said the smaller lender could reduce mortgage rates within a month if the government were to level the guarantee’s pricing structure.

Advertisement
Advertisement

“If you don’t give that same relief to the guys who’ve been funding mortgages so far, it then puts an unfair burden on those banks which continued to lend and grow their lending through the financial crisis,” Mr Kangathran said.

“[This] is against the government’s policy objective.”

On 12 October 2008, the federal government announced guarantee arrangements for deposits and wholesale funding of eligible banks.

Under the voluntary scheme, banks could obtain guarantees for deposit balances totaling over $1 million per customer and for wholesale funding liabilities.

Rather than announcing a date for the scheme’s withdrawal, the government is expected to set a timetable.

PROMOTED CONTENT


Second-tier banks disapprove guarantee change
default
TheAdviser logo

If you’re feeling overworked and overwhelmed in this fast-paced mortgage market, it’s time to make some changes, and the Business Accelerator Program can help! Early bird tickets are on sale now. Work smarter, not harder, this year.

default

 

more from the adviser
Renee blethyn NextGen.Net appoints head of broker

NextGen.Net has appointed its inaugural national head of broker ...

BBS Summit 2021 ta Better Business Summit and Awards Sydney postponed

Due to the ongoing COVID-19 resurgence in Sydney, the NSW leg of ...

Andrew Moulds Darren Smith ta Lend adds FleetPartners to platform

Lend has integrated vehicle fleet leasing and fleet management pr...