Friday, December 2, 2011

Australia's "big four" banks downgraded as ratings agencies rebuild reputations and brace for Europe fallout

As the Europe's debt crisis deepens, Australia's big four banks have been hit with a ratings downgrade.

The revisions come as ratings agencies tighten up their definition of risk after the collapse of Lehman Brothers more than three years ago.

Here's my analysis form this morning's edition of AM.

While the downgrades had been flagged for more than a year, it's more evidence - if more was needed - that banks are operating in an increasingly risky and uncertain world

The moves comes after this week's decision by Standard & Poor's to cut the ratings of 15 banks in Europe and the United States

For Westpac, the Commonwealth, ANZ and the NAB it's down one notch from AA to AA-minus  - that's the fourth highest rating on the S&P scale.

Even so, the "big four" remain among a handful of highly rated banks in the world and S&P made the point that Australian banks are underpinned by "conservative and comprehensive regulation, and the banking sector's very low risk appetite".

Thursday, December 1, 2011

Global central banks take emergency action to ease Europe crisis woes as credit freeze threatens

The world's top central banks have taken emergency action to ease Europe's debt crisis.

Six central banks led by the US Federal Reserve will provide cheaper funding to European banks in a bid to restore confidence and to prevent a new credit freeze.

The intervention created a surge on global sharemarkets and the Australian dollar rocketed from below parity to as high as 103.34 US cents.

Markets in Paris, France, London and Madrid surged between three and almost five percent as investors grasped a ray of optimism.

But this is not a gamechanger - instead a new mechanism to buy time in a world where time is running out.

Here's my analysis from this morning's edition of AM and I discussed the intervention with Virginia Trioli on ABC News Breakfast.

Wednesday, November 30, 2011

Commonwealth Bank boss Ralph Norris signs off after five years; regrets Storm Financial links; says Australians will always think "banks are bastards"

He's been one of the most controversial and fiesty banking bosses Australia has seen - the man borrowers and politicians love to hate.

But today Ralph Norris ends his five year reign as the Commonwealth Bank's chief executive.

Read my feature on ABC News Online. Listen to the interview here.

Mr Norris is perhaps best known for last year's Melbourne Cup day interest rate hike which almost doubled the Reserve Bank's official move.

But he's also been praised for steering the Commonwealth through the still unfolding global financial crisis and delivering multi billion dollar profits.

On his final day in the job, Mr Norris defended his tough decisions and cited the bank's role in the Storm Financial group as his main regret.

Mr Norris also said he wouldn't put his house on the Treasurer's commitment to return the federal budget to surplus.

Will Australians always believe "banks are bastards"? He doesn't think he's convinced any borrower otherwise.

But he thinks there may be bigger things to worry about very soon, considering the global risks being posed by Europe.

OECD says Eurozone muddling risks "highly devastating outcomes"

The Organisation for Economic Cooperation and Development - or the OEDC - is now warning that a breakup of the single euro currency can no longer be ruled out.

It says the Eurozone is already in a mild recession and has downgraded global growth forecasts as a result.

The OECD has also put renewed pressure on the European Central Bank should play a bigger role is defusing the crisis.

Here's my analysis from Tuesday's edition of AM and a longer version broadcast on The World Today.

Monday, November 28, 2011

Qantas boss denies claims that Asian expansion is dead because of Euro crisis fears

Qantas chief executive Alan Joyce has rejected reports that he is dumping plans to establish a full-service airline in Asia in favour of a deeper alliance with Malaysian Airlines.

Mr Joyce insists Qantas management is still in talks with Singapore and Malaysia to establish an airline to service the business market in the region.

He says a new premium airline in the Asian market remains a key part of the airline's strategy, which also includes the launch of the budget Jetstar Japan carrier and other ventures in the region.

"We believe that a new premium airline in Asia is important for us," Mr Joyce told me in an interview broadcast on The World Today.

"And the timing of that airline and how it works with partners is still part of the discussions we are having with both Singapore and with Malaysia, and no final decision has been made on what we are going to do."

But Mr Joyce would not be drawn on the outcome of meetings with regulators and government officials in Singapore and Malaysia in the last week. 

"We are still continuing to dialogue with them and it is inappropriate for me to comment on that dialogue," he said.