Crikey

What’s going on at St George Bank as it contemplates life with former CEO, Gail Kelly? This email to the bank’s margin lending department makes you wonder if its not only not very good, but not very clever with either people or money. It’s no more Mr Nice Guy.

The lenders have suddenly become much more brutal, just as the clients have become more vulnerable. In short, the margin lenders are going to try making their clients put huge waves of “sell at any price” orders onto the market just while we are over-reacting to recent American news. What are the RBA and ASIC going to think of this? The banks are doing exactly the right thing if their intention is to further destabilise an unstable situation.

Clearly the bank doesn’t want to be in a position where it looses money from clients’ positions worsening significantly without a call being made as quickly as possible to restore the position. The ANZ Bank has already shown how allowing margin lending to get out of hand, can hurt a bank and its bottom line. The following email makes you wonder if the St George’s margin lending department had become lax in enforcing margin calls on clients.

Hi All,

Can you please take note of the following TWO important pieces of information from Risk regarding Margin Calls.

1. When receiving or making a margin call, please advise the following.

    — The client has until 2pm the next business day to clear the margin call in FULL

    — No longer will we accept clients slipping just under the buffer, this will require a Risk sign-off

2. Due to a Navigator file upload a lot of client’s portfolios have changed significantly.

A lot of clients are now in margin call. If a client calls up regarding the movement please advise:

“We receive uploads from managed fund and master trust providers periodically. Yesterday we received the latest file reconciling your position to reflect your current holdings.”