The author has been described by News Ltd as an "iconoclast", "Svengali", a pollie's "economist muse", and "pungently accurate". Fairfax says he is a "Renaissance man" and "one of Australia’s most respected analysts." Stephen Koukoulas concludes that he is "85% right", and "would make a great Opposition leader." Terry McCrann claims the author thinks "‘nuance’ is a trendy village in the south of France", but can be "scintillating" when he thinks "clearly". The ACTU reckons he’s "an enigma wrapped in a Bloomberg terminal, wrapped in some apparently well-honed abs."

Monday, May 28, 2012

More on the perils of offshore banking expansion

You'd think both the banks and APRA would learn, but apparently not. The banking industry's secret source, Banking Day, reports today:

Clydesdale loss worse than reported 28 May 2012 7:06am National Australia Bank provided an alternative, and grimmer, view of its banking business in the UK, over the half year to March 2012, on Friday. Financial statements for Clydesdale Bank, published by the NAB subsidiary on Friday, show the bank made a loss of £186 million in the March 2012 half compared with a loss of £43 million in the March 2011 half. The bad debt charge in the income statement for Clydesdale for the half year was £416 million, up from £150 million for the same period in 2011. In its interim financial statements, released earlier this month, NAB put its loss in the UK for the half year, on a "cash" basis, at £25 million. Most of the difference is due to the additional provision the bank has had to make for mis-selling of consumer credit insurance (an industry-wide issue in the UK).

In the same publication, Banking Day, reports that ANZ is planning on becoming Indonesia's (?!?) leading corporate (?!?!) lender. Close followers will know my views on ANZ's Asian expansion plans, which APRA and the RBA have belatedly embraced. They will also know that I've regularly highlighted here the higher default and loss severity risks associated with corporate vis-a-vis residential lending:

ANZ aims to be Indonesian dynamo: ANZ is thinking big in Indonesia and set itself the goal of aiming to be Indonesia’s leading lender to commercial businesses within three years, the Jakarta Post reported. Saud Minam, head of commercial banking at ANZ Indonesia, told the newspaper the bank planned to be the market leader in the commercial business sector and trade financing by 2015. Saud defined the commercial business sector as including those companies with an annual revenue of between US$2 million and US$150 million. The lender aims to grow its revenue by 65 percent annually in the next three years, Saud said.