Thursday, May 18, 2017

Competition boss Rod Sims warns big banks on levy - "we are watching"

Australia's five biggest banks have been put on notice that the competition watchdog will use new surveillance powers to ensure they don't pass on the new bank levy to customers or shareholders.

The Australian Competition & Consumer Commission (ACCC) will be able to summon bank chiefs for hearings under oath in addition to accessing internal reports and emails to track whether $6.2 billion dollar levy over four years is being absorbed.

While the regulator doesn't have the power to stop the banks from defying the government's order to pay the levy to help with budget repair, it's sending the a clear message to banks that their every move is being scrutinised.

ACCC chairman Rod Sims has kept an unusually low profile since budget night while forming a surveillance squad to monitor the inner workings of Commonwealth Bank, Westpac, National Australia Bank, ANZ and Macquarie Group.

Mr Sims told the ABC's AM program that watchdog will use its new powers to force greater transparency in banking competition with a particular focus on the new bank levy.

"Of course we don't have power to stop the banks from doing anything but I think the fact that we're looking will have an effect," Mr Sims said.

"But we'll not only get access to reports they do internally we'll have access to emails and other such things. We've got the ability to get them (bank executives) in to have compulsory hearings under oath."

The ACCC's bank squad will comprise about a dozen specialists assessing competition in the finance sector with the option of hiring in external consultants with insider banking experience.

However, Mr Sims confirmed the ACCC would not have the ability to place officials inside banks to turn up the surveillance heat.

Earlier this week, Treasurer Scott Morrison accused banks of using a "voodoo blackbox" to cloud the true cost of banking and how fees to customers are formulated.

But Mr Sims is confident the new powers provided to the ACCC in the budget will be enough to keep major banks honest.

"We have information gathering powers that give us access to their information explaining internally how they're doing what they're doing," Mr Sims told AM.

"That's information they'll have to provide because they have a hierarchy and various layers in the organisation. But that key starting point we have is access to that internal  information."

Mr Sims rejected claims by major banks that the bank levy was a last minute decision made in the days leading up to budget night.

"We had plenty of notice. We were given a look at the potential direction and were able to comment on that. So we had all the notice one could expect," Mr Sims said. 

But in the face of a fightback from the major banks, Rod Sims denies he is feeling the pressure from Scott Morrison to deliver on greater banking transparency.

"We're not in the pressure feeling business. We're pretty relaxed. We're asked to do a job and we'll do that job well."

The five major banks last night received confidential briefings on how the levy will work but were required to sign confidentiality agreements beforehand.

However, banks are expected to continue reporting to the stock exchange in the coming days on how the levy could impact future profits.

Wednesday, May 17, 2017

Ron Walker endorses TPG offer for Fairfax Media - but now media silence from former chairman

Former Fairfax Media chairman Ron Walker has endorsed a $2.76 billion takeover bid for the company by the US private equity group TPG and the Ontario Teachers’ Pension Plan.

In interviews with print journalists, Mr Walker said TPG's revised offer for entire Fairfax business would be a good outcome for shareholders and might protect Fairfax's quality journalism at The Age, Sydney Morning Herald and Australian Financial Review.

However, despite endorsing the TPG offer Mr Walker withdrew from a scheduled interview with the ABC's "AM" program after deciding to make no further comments.

Asked whether he had been pressured by Fairfax Media to remain silent on the TPG offer, Mr Walker told the ABC the decision was “my own call”.

A Fairfax spokesman confirmed the request did not come from Fairfax Media and that “we haven’t spoken to Ron”.

But earlier reacting to Mr Walker’s endorsement of the TPG offer,  the spokesman said "Ron's views are Ron's views".

"It's the best thing for shareholders," Mr Walker told The Australian Financial Review which is published by Fairfax Media.

"After having years of not great returns they have now got the opportunity to join one of the world's best dealmakers and make it a very successful company once again."

The intervention of Mr Walker - who led Fairfax from 2005 to 2009 - is seen as significant given concerns that TPG is a foreign predator only interested in the Domain real estate business and intent on breaking up the rest of once mighty media empire.

Mr Walker, who owns Fairfax shares, also anointed the head of the Domain real estate business Antony Catalano as the new chief executive of a restructured company.

"Antony Catalano has always been destined to be a CEO," Mr Walker told the Australian Financial Review.

The ABC understands the endorsement from the former chairman was not welcomed by Mr Catalano given the sensitive stage of the TPG proposal.

The Fairfax board says it is considering the revised offer from TPG of $1.20 a share for 100 percent of the company rather than the original bid for Domain and the three metropolitan mastheads.

The revised offer from TPG on Sunday improves the original bid of 95 cents a share that did not include Fairfax's regional newspapers, its New Zealand assets, its stake in the Macquarie Radio Network and a 50 percent share in the Stan streaming service.

The Fairfax board says if accepted the TPG bid would require approval from shareholders and the Foreign Investment Review Board (FIRB).

Treasurer Scott Morrison would have to endorse any decision from FIRB given national interest issues that could be raised by the sale and possible breakup of the once mighty Fairfax Media empire.

Fairfax shares closed higher yesterday at $1.19 having reached a six year high in the wake of the TPG proposal.

Follow Peter Ryan on Twitter @peter_f_ryan