Australia’s banks are in a strong position to ward off turbulent conditions overseas, the financial services minister says.
Stephen Jones allayed fears of contagion from US and European banks following the collapse of Silicon Valley Bank and Credit Suisse, crediting stronger regulatory conditions for stronger resilience in the domestic financial market.
“While we’re not immune from the volatility in global financial markets, Australia’s banks are very well regulated, very well capitalised and have strong liquidity coverage,” he told the Australian Financial Review Banking Summit on Tuesday.
Australian Banking Association chief executive Anna Bligh agreed, adding that unlike financial sectors overseas, all Australian banks are subject to liquidity coverage ratios, including smaller players.
The banking sector remains “on high alert”, but at this stage contagion has been restricted to Europe and the US, she said.
Financial markets rebounded in the US and Australia on Monday after First Citizens’ purchase of Silicon Valley Bank’s assets eased contagion fears.
Rising interest rates have led to a credit crunch for several regional banks in the US, sending deposit holders fleeing to larger players seen as a safer bet.
But analysts have commented the risk of banking failure is lower than during the global financial crisis because deposits are effectively insured by governments.
Ms Bligh warned against increasing the major bank levy as a charge to fund the government’s deposit guarantee, arguing the reputation of the big four banks helps smaller players access credit on the international market.
“It would be very disappointing to see the bank levy increased or any further hands in the pockets of banks,” she said.
“The last thing we need for Australia’s banks is any further uncertainty.”
Mr Jones said he had no intentions of increasing the levy.
Meanwhile, the assistant treasurer said the establishment of a national anti-scam centre will be at the core of a plan to make Australia the “destination of last resort for those who ply their misery in economic scams”.
The government’s strategy includes limiting the amount of customer data that companies can store, speeding up identification of scams when they occur, bolstering safety of transactions and helping victims recover stolen ID more quickly.
“Consumer protection is core economic reform,” Mr Jones said.
The comments come after consumer finance company Latitude Group admitted on Monday 14 million Australian and New Zealand customers had records stolen from its systems.
– AAP
