It seems some of Australia’s biggest home loan lenders are still battling against new rules surrounding the lifeline the Reserve Bank offers big banks, and the banking system more broadly, in times of economic and financial trouble.
Put simply, just as the banks want to see your financial position when you take out a loan, the Reserve Bank wants to see a bank’s home loans books, or at least the details of the assets the banks will be giving the RBA, before it is willing to commit to bailing them out if things go awry.
That is, they want to know what they are getting before they write a cheque to the banks on the taxpayers account.
But, Australian Banking and Finance (AB&F) this morning says that ‘three large banks’ are seeking to use privacy concerns as a way to avoid compliance.
Peter Casey, deputy treasurer of the local arm of the ING – one of the globe’s biggest banking and financial services companies – told AB&F that his bank was satisfied the security the RBA has in place had dealt with any privacy concerns.
That feels like a red flag according to Brian Johnson, CLSA’s highly respected banking analyst. Johnson told AB&F that “if the RBA has addressed the client privacy and security concerns, it is hard not to conclude there is something wrong with the loans”.
“He isn’t surprised that may be the case because he’s been bothered for some time by some of the detail in the banks’ financial results pack,” the article said.
It is exactly the point we argued recently when we highlighted the transparency that the new rules would bring to the Australian home loan market. These rules should ensure that the real risks being taken on Australian balance sheets are properly understood. Indeed RBA assistant governor Guy Debelle said recently:
The required information, which must also be made available to permitted users, will promote greater transparency in the market, supporting investor confidence in these assets. These requirements will also provide the Bank with standardised and detailed data on ABS, which are a major part of the collateral eligible to be used under the CLF.
Surely that’s not too much to ask when it’s the taxpayer, via the RBA, which will be backstopping Australian banks if one, or many, get into trouble in the future.
Try asking a bank for a loan without giving them your details. It won’t happen. This is no different.