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Tuesday, 29-Oct-2013 05:30 Email | Share | Bookmark
Nab Raises Cost Of Some Business Loans

Report due on Japan's Mizuho mob-loan scandal, serious penalty unlikely

NAB will increase the liquidity margin that applies on some of its business loans by 20 basis points, from July 30. The bank says the liquidity margin only applies to some market-linked visit homepage loans that are targeted primarily at mid to large businesses which want to access funding for short periods. NAB says the vast bulk of its small business customers will not be affected by the increase, because they generally use variable rate loans. In an indication the spectre of independent rate rises by the banking sector more broadly has not gone away, NAB says the liquidity margin increase has been driven by rising funding costs. The bank says the interest rate on term deposits is at an all time high relative to the Reserve Bank's cash rate, and that its wholesale funding costs also remain high. NAB's group executive business banking Joseph Healy says the bank wants to keep customers informed about the funding pressures. "NAB is committed to being transparent about our funding costs and explaining the portion of our customers total rate that is attributed to cost of funds," he said in a statement. <br>For the original version including any supplementary images or video, visit

Financial comparison website RateCity said Holiday Coast Credit Union cut several of its loan products by 20 basis points, BMC Mortgage reduced several loans by 10 basis points, while IMB trimmed one of its loans by five basis points. "While there have been several rate increases out of cycle, we've never seen lenders drop variable home loan rates while the cash rate remains stable," RateCity spokesperson Michelle Hutchison said in a statement. Since the government announced its comprehensive package of banking reforms in December 2010 to boost competition, smaller banks have captured an estimated $21 billion in home-lending business from the big banks. "We've made it easier for consumers to walk down the road and get a better deal if their bank doesn't do the right thing by them," a spokesman for Mr Swan told AAP on Thursday. Ms Hutchison believes other lenders have room to move. On average they have kept 42 basis points of the Reserve Bank of Australia's (RBA) 175 basis points of official rate cuts since November 2011 from variable home loan borrowers. "If these three lenders can afford to cut variable rates out of cycle, other lenders - including the major banks - have no excuse to sit on their hands," she said. RBA governor Glenn Stevens will likely be quizzed on the cost of funds for banks and how that fits in with monetary policy when he faces federal MPs in Canberra on Friday. In its most recent statements, the central bank has indicated it stands ready to cut the cash rate again if needed given the benign inflation outlook. New data on the Thursday bucked the trend of subdued pressures, indicating that the average wage jumped five per cent in the year to November for an annual salary of $72,592. <br>For the original version including any supplementary images or video, visit

Small lenders take initiative on rates

Some members of parliament have called for Sato to testify on the affair and, people familiar with the matter say, the FSA is under pressure to appear tough as questions arise over why it did not uncover the shady loans earlier. Finance Minister Taro Aso, who heads the FSA, said on Friday the regulator would decide what action to take based on Monday's panel report. LEFT BEHIND BY RIVALS Sato is expected to hold a news conference on Monday to announce the bank's response. More than 30 executives will take pay cuts, and Mizuho will ask about a dozen former executives to return some of their compensation, Japanese media said. The scandal, in addition to highlighting the pervasive reach of "yakuza" crime syndicates and other underworld elements throughout Japan Inc, highlighted the lapses in corporate governance that Sato himself has been struggling to fix. The bank, 13 years after its formation in a merger during Japan's financial crisis, remains riven by factions associated with its legacy banks: the Industrial Bank of Japan, Dai-Ichi Kangyo Bank and Fuji Bank. The tussling fiefdoms have fostered a culture of protecting turf and refraining from taking broad responsibility for problems, Mizuho bankers say. <br>For the original version including any supplementary images or video, visit

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