Regulators and bankers insist the country’s banks, bolstered by post-global financial crisis reforms are well placed to handle the solvency and liquidity shocks that rocked lenders overseas like Silicon Valley Bank in the U.S.
A stress test announced by an Australian prudential regulator on Tuesday found bank capital would stay above minimum levels in a doomsday scenario where unemployment rose to 11%, house prices fell 43% and cyber attacks hit the major banks.
But what has helped insulate the banks from trouble overseas – reliance on mortgages and retail deposits – now threatens to hurt profitability, with competition for loans and deposits intensifying, the chiefs of Australia’s top and third-largest lenders and other bank executives told a summit in Sydney.
“It’s the most competitive market for mortgages that I’ve seen in my career,” Westpac Chief Executive Peter King, who started at the bank in 1994, said at the Australian Financial Review…
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