Australia's banks may struggle to provide enough business credit if borrowing levels recover, NAB says.
Major banks would struggle to cope if borrowing levels recovered, the National Australia Bank has told a Senate inquiry.
NAB's
chief financial officer Mark Joiner says Australia is still mired in
the global financial crisis and would continue to be "for some time".
In
this environment, he said NAB was "finding it quite difficult" to move
away from safe-haven and fixed-income assets like bonds as financial
market volatility continued.
Unstable sharemarkets were making investors "fearful" and encouraging them to put their superannuation into cash.
He
added that wholesale money market volatility and strong competition for
deposits among Australia's major banks meant these lenders may not have
sufficient funds to provide business credit in the event of a borrowing
recovery.
"The Australian banks would struggle to go along with
the demand for credit," Mr Joiner told the Senate economics committee
inquiry in Sydney.
"It can be solved. We're not in a position to
solve it very easily at the moment, but it can be can solved by
strengthening the ability to distribute (banking) assets to
superannuation funds."
Commonwealth Bank-owned subsidiary BankWest
was under fire at the hearing for bringing in receivers to cheaply wind
up a rural NSW hotel and property developments in NSW and Queensland
that had appeared to be solvent.
BankWest managing director Rob De
Luca repeatedly said, in the presence of hostile audience members at
NSW Parliament House, that it was not in the bank's interest to default
on business loans.
"It's in our interests for the customers to be
viable and to be able to repay the debt," Mr De Luca said, adding those
who filed complaints made up just 0.01 per cent of its customers.
"There was no benefit either to BankWest or to CBA in defaulting customers or causing losses to customers.
"In fact any losses that arose were borne by BankWest."
BankWest
Business chief executive Ian Corfield denied a suggestion from
Nationals senator John Williams that BankWest had panicked.
"I
don't think so. The reality is that some of those markets dropped
between 50 and 80 per cent and they have not recovered," Mr Corfield
said.
CBA bought BankWest from struggling UK banking group HBOS for $2 billion in 2008 but took on $17 billion in funding liabilities.
Online
banking group ING Direct told the inquiry wholesale borrowing costs
were rising, and Australian consumers were gloomy despite weathering the
GFC with a triple-A credit rating.
"If you look at Australia, on
the macro scale, it has survived the GFC quite well," ING Direct's chief
risk officer Bart Hellemans said.
"It's one of the few triple-A
rated countries left in the world ... and yet people seem to still have a
feeling that the worst is to come.
"There's a lack of confidence and that actually impacts quite a lot on decision making, particularly upon the consumer."
