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BFCSA investigates fraud involving lenders, spruikers and financial planners worldwide.  Full Doc, Low Doc, No Doc loans, Lines of Credit and Buffer loans appear to be normal profit making financial products, however, these loans are set to implode within seven years.  For the past two decades, Ms Brailey, President of BFCSA (Inc), has been a tireless campaigner, championing the cause of older and low income people around the Globe who have fallen victim to banking and finance scams.  She has found that people of all ages are being targeted by Bankers offering faulty lending products. BFCSA warn that anyone who has signed up for one of these financial products, is in grave danger of losing their home.


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BFCSA: Aussie banks can afford $12 billion Kiwi safety net, says RBNZ

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Aussie banks can afford $12 billion Kiwi safety net, says RBNZ

Sydney Morning Herald March 14, 2019 12.00am

Clancy Yeates


EXCLUSIVE  The Reserve Bank of New Zealand has mounted a firm defence of its plan to force Australia's major banks to hold $NZ12.5 billion ($A12.12 billion) more in capital in their banking operations across the Tasman, saying the "highly profitable" businesses would have to accept lower returns.

In an interview on Wednesday, RBNZ deputy governor Geoff Bascand also justified the plan to bolster bank balance sheets by emphasising the social costs of banking crises and arguing New Zealand could not rely on Australian parent companies for a bail-out in severe shock.

The RBNZ's surprise proposal to make the big four's Kiwi businesses build larger capital buffers, announced in December, has been a key drag on the share prices of the big four banks in recent months.

The change, which is the subject of consultation, is aimed at making the lenders more resilient in a severe banking crisis.

It would also hit the profits of NZ's biggest banks, which are owned by Commonwealth Bank, ANZ Bank, Westpac and National Australia Bank, sparking a debate about how the extra cost would be shared between customers and bank shareholders.

Mr Bascand told the Sydney Morning Herald and The Age that the RBNZ would be "very surprised" if shareholders needed to maintain exactly the same rates of return being made by the big four's local operations in New Zealand.

"In the end it will be up to the investors to decide their capital allocation and whether they will be prepared to put that much more capital into the New Zealand banks,” Mr Bascand said.

"But the New Zealand banks have been highly profitable, they are disproportionately profitable relative to their parents, they earn a greater share of profits than they do of their capital weighting, or of their asset share."

The big four Australian banks made $4.4 billion in cash profits from their New Zealand operations in 2018 representing about 15 per cent of their total combined profit with ANZ tipped to experience the most significant hit.

Mr Bascand said the central bank had estimated the big four's NZ return on equity, until recently 14 to 15 per cent, would decline by between and 1 and 3 percentage points as a result of the change.

While some Australian analysts counter that NZ bank profitability is similar to Australia once institutional business is excluded, Deutsche Bank analysts Matthew Wilson and Anthony Ho last week supported the view that investors would need to accept lower bank returns in NZ.

The analysts said the big four enjoyed "oligopoly-like returns" from a market in which they controlled 88 per cent of assets, and the RBNZ's proposal was "quite sensible."

Local critics have also said the proposal is unnecessary when Australia banks have already been forced to raise billion in capital in recent years.

But Mr Bascand said "each country has to have its own capacity to resolve its own banking crisis," and New Zealand could not rely on the Australian parent companies for a bail-out.

“You could get a banking crisis that Australia and NZ are both hit concurrently with, and we need to make sure our banks stand strong in it,” he said.

In response to the proposal, analysts have predicted the Australian banks may increase interest rates on NZ borrowers sharply, or even consider de-merging their NZ businesses.

Commonwealth Bank chief executive Matt Comyn last week told a parliamentary inquiry the RBNZ change would require a "substantial" increase in capital and there could be a "dilution" of returns.

Westpac chief executive Brian Hartzer told the same inquiry that the RBNZ's proposal was a "very serious concern" and would lead to "interesting choices about credit appetite, cost of credit and the like."

The RBNZ has acknowledged interest rates charged by banks will probably rise as a result of the change, but Mr Bascand said it estimated the impact would be about half a standard 0.25 percentage point move in official interest rates.

If banks' borrowing rates did rise more sharply than expected, he said the RBNZ could offset this through monetary policy, also taking into account wider economic forces.

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