Banking & finance briefs: Graeme Hart refinances, investors' advise Aussie banks to settle class action.
1. Graeme Hart refinances bank debt - New Zealand's richest man is refinancing a US$400 million bank loan facility. The Ausrtalian Financial Review reports Hart's Rank Group is raising the debt at the holding company level, paying an effective rate of 8% or 750 basis points over the London interbank offered rate. Funds from the facility, being arranged by Credit Suisse, will be used to refinance NZ$930 million Rank has with ANZ, BNZ, BOS International Australia, the Commonwealth Bank of Australia, Credit Suisse, HSBC, Mizuho Corporate Bank, Rabobank, Sumitomo Mitsui Banking Corp, ABN Amro, WestLB and Westpac.It's a continuation of a recent refinancing spree by Hart.
2. Investors' advise banks' to settle: A total of 74% of Australian investors surveyed in a Colmar Brunton and Fairfax poll believe banks should settle the class action they're facing over alleged late payment overcharging. The Sydney Morning Herald reports the vast bulk of investors surveyed say the banks ought to apologise and settle before the case reaches court to protect their reputations and share prices. The case alleges the banks gouged A$5 billion in late payments from millions of customers. The class action has so far attracted about 100,000 applicants.
3. ANZ cuts long-term Aussie loans - ANZ has lowered a range of longer-term fixed mortgage rates in Australia becoming the first of the major banks over there to signal an easing in long-term funding costs, The Sydney Morning Herald reports. The cuts mean ANZ is becoming more competitive given it was previously one of the most expensive in the fixed lending arena. ANZ has cut 6 basis points from its three-year fixed rates meaning they're now priced at 7.64%, and 19 basis points from its four-year fixed loans leaving them at 7.74%.
4. Westpac eyes more retail deposit funding - Westpac CEO Gail Kelly has revealed plans for the bank to increase its funding reliance on customers' savings. The Australian reports Kelly told staff in an email that wholesale funding markets would further frasture as a result of the European debt crisis. Westpac's international shareholders had questioned management on the bank's funding priorities in recent briefings after Westpac's half-year results.
"Everywhere we went, Phil (Coffey) and I were asked about funding as well as proposed regulatory changes and their impacts on Australia," Mrs Kelly said.
"The competition for retail deposits is really ramping up and it's clear that our competitions also have a similar focus. They too recognise the importance of deposits as a funding source."
The bank is offering 5 per cent interest on deposits of up to $25,000, ahead of NAB at 4 per cent, CBA at 3.2 per cent and ANZ at 2.5 per cent.
"The importance of deposits is not a new theme for us and a vital part of what we need to do to earn all of our customers business.
Westpac has the highest savings rates on offer in the market, with a current three-month special that is 100 basis points higher than its nearest rival and 50 basis points above the official cash rate.
5 Storm unlikely to have survived the GFC - Storm Financial would probably not have survived the global financial crisis, even if ASB's parent Commonwealth Bank of Australia hadn't sold down its investors' margin loans in late 2008. That, according to The Australian, is what a report for creditors compiled by the financial planner's court appointed liquidators, Raj Khatri and Ivor Worrell, says. They suggested it was unlikely Storm's income stream would have increaed to a level needed to sustain trading during the first half of 2009.
In considering whether to continue Storm's legal action against the CBA last year, the liquidators decided a court would most likely have reached that conclusion.
Townsville-based Storm, run by Emmanuel and Julie Cassimatis, collapsed more than a year ago with debts of about $80 million.
Many of its clients lost their homes and life savings when the sharemarket tanked at the end of 2008 because their investments were very highly leveraged.
They said that, as Storm's investment model was based on leverage, "it was likely a court would conclude that Storm would not have survived, as there would have been very few clients willing to invest in the sharemarket, using leverage, during the first half of calendar 2009".
"Storm would have been insolvent in the first half of calendar 2009," the report says. "As a result of that insolvency the ATO, or the directors, or the ASIC, could have wound the company up."
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