Australian Investment Blog

The Australian banks are in an “eye of the storm” of negativity with everything going against them including a falling $A, rising interest rate concerns and regulatory uncertainties. I find it incredibly ironic that our local banks that held up so magnificently during the GFC to the envy of the world are now in danger from David Murray and the Financial System Inquiry; I would hate to think the reaction if they had been caught in the GFC like a significant number of the US banks. The regulatory risk can be simply summarised as per below:

The speculation of higher capital requirements will create banks with lower risk, but lower profitability (lower return on equity) and lower growth.