Mortgage Repayments To Go Up $100 Monthly If Australian Banks Are Forced To Hike Capital In Reserve

By @vitthernandez on
A man uses his mobile phone outside an Australia and New Zealand bank branch in central Sydney August 16, 2013.
A man uses his mobile phone outside an Australia and New Zealand bank branch in central Sydney August 16, 2013. REUTERS/Daniel Munoz
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A man uses his mobile phone outside an Australia and New Zealand bank branch in central Sydney August 16, 2013. Australia and New Zealand Banking Group Ltd met forecasts with a 12 percent rise in third-quarter profit as tight cost controls offset slower growth in key markets, but said full-year revenue growth would be slower than last year. REUTERS/Daniel Munoz (AUSTRALIA - Tags: BUSINESS)

ANZ Bank opposes the plan by the Australian government to force lenders to have larger capital buffers because of its impact on consumers who would end up paying $100 more on their monthly amortisations.

The higher level of capital buffer is one of the options the Financial System Inquiry is considering to put in place as compensation for enjoying the advantage of being "too big to fail."

ANZ Bank Chief Executive Mike Smith said banks have no choice except to pass it on to consumers. "Who else picks it up? The investors?" Australia's highest-paid bankers asked, quoted by Courier Mail.

He warned that boosting their capital buffer would hike the average loan in Australia by 50 basis points, which translates to $100 more for a loan worth $300,000.

In pushing for the higher buffer level, former Commonwealth Bank Chief Executive David Murray, who heads the Inquiry, said it would make banks "more resilient to future financial shocks."

YouTube/Banking Day

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