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Thursday, 10 July 2008

Banking busts, 2008. A growing list

Ian Rogers, from banking ezine The Sheet, writes:

Below is a lively list, which helps define the first year of the crunch as an unusually destructive and creative force in financial services in Australia.

  • Finished: Rams, Mobius.
  • Finished in name: Maxis.
  • Hibernating: all but a few banks and non-bank lenders, unless already out of business, or named CBA.
  • Switched to servicing: Bluestone.
  • Clinging on: Liberty, most mortgage managers, many brokers.
  • Challenged: Challenger.
  • Adjusting: aggregators.
  • Distinctive funding: Members Equity Bank, Puma.
  • For sale: Aussie Home Loans, Wizard. Maybe GE Money.
  • Pumped up for sale: HBOS.
  • Non-bank survivors: FirstMac, La Trobe Financial, Resimac.
  • Remaining foreign bank challenger: ING.
  • Foreign banks easing out: Citigroup, HSBC.
  • Going: GMAC-RFC, many mortgage managers, many mortgage brokers, most recent entrants to mortgage funding, and maybe also Suncorp and IAG.
  • Gone: St George.
  • Also for sale: any bank.
  • Barriers to sale: ALP policy. Board conservatism.
  • In favour of mergers: (guessing here), ACCC, APRA, RBA.
  • Mergers under negotiation: dozens of credit unions, half a dozen challenger brands in mortgage funding, and all major banks involved in examination of a number of merger options.

Will this shock foster or reduce productivity in banking?

What is the outlook for customer service?

Which models keep the investors on-side, politicians quiet and consumers reasonably satisfied?

Or does the oligopoly just extend market share from 80 per cent something in many product markets to 90 per cent something; in the extremes, pushing 100 per cent?

Who can buy banks? Who can’t?

After a long wait, a 17-year-long boom, consolidation is speeding up in banking.

The money may be expensive, but these may be promising times in banking. Let’s hope so.

3 Comments

  1. Tom
    Posted Thursday, 10 July 2008 at 4:16 pm | Permalink

    What about Virgin Money? They’ve closed their book.

    http://virginmoney.com.au/home-loans/

  2. Ross
    Posted Thursday, 10 July 2008 at 8:55 pm | Permalink

    Since when has Aussie Home loans been up for sale? Aussie John is making a motza refinancing his Aussie loans over to the Bank’s.

    He receives an upfront and trail payment and needs less staff to look after his Aussie loans. If business gets a little slow for his brokers all he needs to do is increase the rates on his aussie loans to make refinanacing more atrtractive.

    A win win situation for him which i couldn’t imagine him leaving for quite a while.

  3. Raemond
    Posted Friday, 11 July 2008 at 8:50 am | Permalink

    …….Seiza Capital, IMB, Capital Securities, Macquarie, Pepper, Sintex (no more Lo Doc) and the carnage will continue. FirstMac may be surviving but they are deliberately rationing funding by pricing themselves out of the market (as is ING Wholesale). The Big Four are keeping shareholders happy by increasing market share but it will be interesting to see how happy these same shareholders are when they realise new business written at prevailing rates is more or less marginal in terms of profitability…..and so up go the interest rates to borrowers, and so the non-bank lenders come back into the lending equation.