"Research rejects higher bank funding cost claims"

Hi Followers

A good read below:

FUNDING costs for local banks are falling despite their protests to the contrary, according to research from large French bank Societe Generale.   

In the past fortnight, all of Australia's major domestic banks have cited rising funding costs as the reason for lifting their lending rates despite the Reserve Bank of Australia (RBA) leaving the cash rate unchanged in February.

Societe Generale Asia head of interest rate strategy Christian Carrillo on Tuesday said the banks' claims about higher funding costs could not be confirmed by available data from the RBA and the Australian Prudential Regulation Authority (APRA).

``What we have seen over the past six months is overall funding costs for Australian banks actually come down,'' he told ABC Radio.

``Research suggests that, effectively, every source of funding that they use in terms of domestic deposits short-term funding, onshore long-term funding, onshore short-term funding has actually gone down.''

Local banks have increased their reliance on domestic markets, in particular deposits, since the global financial crisis in late 2008.

Deposits supplied around 60 per cent of the banks' funding costs nowadays, Mr Carrillo said.
``Their deposits rates have effectively fallen more than RBA cash rate since the beginning of 2011 to now.''

Consumer advocacy group Choice said the analysis from Societe Generale poked holes in the key arguments the banks had used to justify their recent rate rises.

Campaigns director Christopher Zinn said the data showed consumers were receiving a ``raw deal'' from the big four banks.

``This new research shows the funding costs argument appears to not stack up and that it's really a case of major banks choosing to make record profits rather than compete for consumers' business,'' Mr Zinn said in a statement on Tuesday.

Choice has launched a Move Your Money campaign for consumers to stand up to the big four banks and say ``enough is enough''.

This information was gathered from:
http://www.perthnow.com.au/business/research-rejects-higher-bank-funding-cost-claims/story-e6frg2qc-1226276902987

DEB BRADY
0405 570 903