ANZ retreats further from stance on banks interest rates
Monday November 9, 2009
After last week's strong stance to remain with Reserve Bank rates, ANZ bank has been retreating somewhat from this first with the bank stating that it would react to conditions if "something dramatic happened" in the economy or financial markets then with even more position clarification this week.
ANZ Bank initially stated that it was the first of the four major banks of Australia to promise to remain even with the official rates as posted by the Reserve Bank of Australia. The move was even commended by the Federal Government with Treasurer Wayne Swan stating "I join with ANZ customers in welcoming this decision to do the right thing by the economy and pass on no more than official rate rises from the independent RBA,"
"Any bank that chose to raise rates outside the RBA's official rate cycle can expect a strong backlash from both its customers and the community more generally." Mr Swan said.
However, ANZ chief executive Mike Smith did later reposition the banks stance to say that they would not be "stuck on my own" if the other banks chose to raise their rates, saying they would need to remain competitive with their main banks rivals given the delicate state of recovery for the Australian economy.
ANZ bank have gone one step further with ANZ deputy chief executive, Graham Hodges, saying that rising average funding costs were now placing pressure mortgage margins.
"If sustained over time, there will be commercial pressure to pass the additional costs on" Mr Hodges said.
"Right now, it's in everyone's interest that the recovery consolidates and the right thing to do at this point in the economic cycle is for us to absorb the additional funding costs and pass on only the amount of today's official increase to our mortgage and small-business customers."
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