Lenders Must Keep A Cool Head
The Age
Saturday March 29, 2008
WHEN times are as uncertain as they are at present, it is a time to keep the ship safe. This is not a time for any company to over-extend itself. The situation for banks in the US and in Europe is very serious because they have the problems in the debt markets combining with worsening economic conditions.
I am pleased to say Australia is in a much better position because, although we have the same problems in the debt markets, we still have a strong economy. It is pretty well business as usual for us. Any changes we have made to our business plans since the start of the year could best be described as touches on the tiller.Banking is affected in two ways. Firstly, wholesale borrowing over longer terms is more difficult to raise than normal as lenders are reluctant to commit themselves in such an uncertain time. Also the cost of the borrowing is much higher than normal. That is why banks have had to pass on some of these additional costs to customers.I am not optimistic about future trading conditions. Neither am I pessimistic - it is a time to be balanced and realistic.What is required from leaders in these times is a cool head. We have to be careful that we do not allow problems in financial markets to cause a "credit crunch", because that could damage the economy. -- NABILA AHMED
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