The fishwrappers have gobbled up the
Macquarie Bank spin on its proposed restructuring – separating the “bank” bit from what it really
does for a crust – without much thought of how APRA might feel about it. I
rather suspect chairman Dr John Laker would be delighted. I almost wonder if he
gave the idea a nudge along.
If you just listen to the song Macquarie is singing, being a
bank has been a terrible burden for the poor little millionaires. A decent
ballad might at least include a verse or two about the greater credibility the
“bank” moniker gave Macquarie when it first started running around buying up
the world, never mind the price at which banks can borrow money, as opposed to,
say, very highly geared real estate speculators.
But Macquarie has moved on a long way from being a newbie from Down Under and no
longer needs the implied imprimatur of being overseen originally by the Reserve
Bank and subsequently by APRA.
Then there is the little matter of Basel II
– the new banking regulatory system being rolled out around the world. It’s all
a bit harder for the bankers and to make it pay, they have to receive APRA’s
accreditation as an “advanced” bank, displaying superior internal risk management
and measurement capabilities and practices.
Basically, APRA has to trust them to have a
sophisticated risk management ability.
APRA’s problem in accessing that is that it’s not exactly long on talent
with sophisticated risk management ability itself, which, post-HIH, makes it
very cautious and highly reliant on outside consultants.
So here comes big, complicated, fancy-pants
Macquarie Bank along to APRA to be told whether it’s advanced or not. The
MacBank’s CEO’s salary alone could probably buy everyone in APRA who’s supposed
to know about banking.
And all the time there’s APRA’s worry that
somehow or other, Macquarie’s ever-growing, highly-geared multi-billion dollar deal machine making
might one day hit a road bump – which
then becomes APRA’s problem.
Yes, Macquarie, please separate out your tiny “bank” business so that the APRA
folks can sleep at night. More than anything else, the restructure would make
APRA’s job much easier.