Banking and finance briefs: Aussie banks facing major legal action

1. Big legal battle brews for Australia's banks - Australia’s banks face a major legal stoush for allegedly overcharging customers about A$5 billion in penalty and late fees over the last six years. Fairfax's BusinessDay.com.au reports litigation funder IMF Australia will pay for more than 10 class actions against the banks, including the "Big Four" - Commonwealth Bank of Australia, ANZ, Westpac and National Australia Bank - as it strives to claw back at least A$400 million in what its lawyers will claim is a systematic gouge of banking customers. Another seven banks are expected to be targeted including Bank of Queensland, Bendigo and Adelaide Bank, Suncorp, HSBC and Citibank. 2. Aussie govt moves to boost banking competition - Australia's federal government is trying to head off criticism of the increasing power of the country's big banks with new moves to encourage the development of a corporate bond market and tax cuts to make it easier for smaller lenders to raise money offshore, The Australian reports. It also revealed a 50% tax discount on interest earned from deposits in banks, building societies and credit unions,  a step also designed to encourage retail investors to put their money into a broader range of financial institutions. Treasurer Wayne Swan said the measures would  "boost competition in business lending" by making it "easier for businesses to borrow directly from retail investors and reduce their reliance on borrowing from banks". 3. Funding boost for Aussie banks - Meanwhile The Age reports Australia's major banks are in for a funding injection following the federal government's move to adopt measures to encourage individuals to plough more funds into savings through the bigger-than-expected tax break on deposits. The tax break could ease funding costs and in turn reduce pressure on banks to pass on higher interest rates to mortgage customers. The government also supported calls by global banks operating in Australia to scrap the 10% interest withholding tax on accessing deposits held by banks' parent companies offshore.

Under current rules bank deposits have the highest effective marginal tax rates of all savings which includes property, superannuation or listed shares. Tax on bank account savings also ranks as one of the highest in the world. Combined, the measures are expected to reduce banks' reliance on costly wholesale funding - a key driver of banks passing on interest rate rises in excess of moves by the Reserve Bank. A little under half the lending book for big banks is made up of wholesale funds, where pricing - particularly for long term funding - has skyrocketed since the onset of the credit crisis.

4. Propertyfinance seeks delisting and liquidation - Propertyfinance Group says given continuing regulatory and market changes in the non-bank deposit taking and property sectors it no longer has a viable business or means to access capital. The directors, therefore plan to hold a special meeting seeking the delisting and voluntary liquidiation of the company. 5. PAM retail fund to invest in international debt - Pyne Gould Corporation's Perpetual Asset Management has launched its first retail fund, which will invest in international debt. The PAM10 or "Perpetual Global Bond Fund" is a portfolio investment entity and was launched at the start of April and has attracted $2.4 million so far, Marta Steeman at The Press reports. PAM will invest the proceeds of the fund into Deutsche Bank Global Bond Fund. Retail investors cannot subscribe for units in the fund directly, having to go through financial advisers and planners who use wrap platforms and custodial services. The minimum initial investment is NZ$1,000. 6. ANZ to shift HQ? - According to the NZ Herald, ANZ is considering signing up for a new, purpose-built New Zealand headquarters. The bank, the newspaper said, was keen to lease much of a new 26-level office tower opposite Auckland's Britomart on Customs St East. ANZ is currently a tenant of AMP NZ Office Trust's ANZ Tower on Albert St and the Herald reported the bank might instead move into the PricewaterhouseCoopers building on Quay St. An ANZ spokeswoman told interest.co.nz the bank was reviewing accommodation options for central Auckland based staff as leases came up for expiry. However, no decisions had been made to move its headquarters to Auckland. This was first published this morning in our Daily Banking and Finance newsletter, which is for our paying subscribers. Find out more here.