Footnotes

Chapter 1 - Introduction

[1] Journals of the Senate, 2010–12, no. 81 (14 March 2012), p. 2238.

Chapter 2 - Overview of the post-GFC banking environment

[1] Australian Bankers' Association, Submission 46, p. 13.

[2] Dr Guy Debelle, Assistant Governor, Financial Markets, RBA, Committee Hansard, 9 August 2012, p. 43.

[3] Mr Jim Tate, Acting Chief Operating Officer, Australian Financial Services, Westpac Group, Committee Hansard, 9 August 2012, p. 1.

[4] The state of competition in the Australian banking sector was examined comprehensively by this committee in 2010–11. This section will provide a brief overview of the current state of the market, however, the information and analysis presented by the committee in 2011 is still relevant. Readers seeking additional information about competition in the banking sector should refer to Senate Economics References Committee, Competition within the Australian banking sector, May 2011.

[5] ACCC, Merger guidelines, November 2008, p. 37. See also Senate Economics References Committee, Competition within the Australian banking sector, May 2011, pp. 41–42.

[6] The different numbers yielded by the two methods arises as the market shares of the firms can be expressed either as proportions or as a whole percentage—e.g. the HHI of two firms with an equal share of the market (50 per cent) can be calculated as 0.5²+0.5²=0.5 or 50²+50²=5000.

[7] ACCC, Merger guidelines, November 2008, p. 37.

[8] They were Westpac's acquisition of St George Bank (then Australia's fifth largest bank) and the CBA's acquisition of Bankwest. The Bankwest acquisition is discussed in more detail in chapter 7.

[9] RBA, 'The Australian Financial System—Box A: Foreign-owned Bank Activity in Australia', Financial Stability Review, March 2012, p. 39.

[10] Mortgage and Finance Association of Australia, Submission 52, p. 3.

[11] RAMS Home Loan Group Limited, 'RAMS funding and annual general meeting update', ASX announcement, 20 November 2007, p. 2.

[12] As the committee observed in 2011, government responses to the crisis such as the wholesale funding guarantee, while overall a sensible and well-intentioned measure, may have exacerbated the 'flight to quality' due to the differential pricing for the guarantee based on credit rating. See Competition within the Australian banking sector, chapter 12.

[13] Commonwealth Bank of Australia, Submission 81, p. 9.

[14] Treasury, Submission 120, p. 5.

[15] RBA, Submission 33, pp. 1, 2.

[16] Mortgage and Finance Association of Australia, Submission 52, p. 9 [table 3; based on Canstar data].

[17] Australian Bankers' Association, Submission 46, p. 13. The issue of increased competition among ADIs for deposits is examined further in chapter 4.

[18] Mr Jim Murphy, Executive Director, Markets Group, Treasury, Committee Hansard, 8 August 2012, p. 4.

[19] Mr Jim Murphy, Treasury, Committee Hansard, 8 August 2012, p. 11.

[20] See Senate Economics References Committee, Access of small business to finance, June 2010; Parliamentary Joint Committee on Corporations and Financial Services, Access for small and medium business to finance, April 2011.

[21] Treasury, Submission 120, p. 10.

[22] Treasury, Submission 120, p. 10.

[23] Commonwealth Bank of Australia, Submission 81, p. 39 (emphasis omitted).

[24] Mr David Cohen, Group General Counsel and Group Executive, Commonwealth Bank of Australia, Committee Hansard, 9 August 2012, p. 25.

[25] RBA, Submission 33, p. 6.

[26] Commonwealth Bank of Australia, Submission 81, p. 36. The CBA also advised that it is ranked 80th by return on assets, however, it should be noted it is more difficult to meaningfully compare returns on assets of companies in different sectors.

[27] ANZ, Submission 78, p. 25.

[28] ANZ gave the following ROE figures for those sectors: resources sector (28 per cent); telecommunications (26 per cent); healthcare (14.4 per cent); and supermarkets (13 per cent). ANZ, Submission 78, p. 26.

[29] See Mr Jim Murphy, Committee Hansard, 8 August 2012, p. 7.

[30] See Senate Economics References Committee, Competition within the Australian banking sector, May 2011, p. 52.

[31] Commonwealth Bank of Australia, Submission 81, p. 36.

[32] Mr Jim Murphy, Treasury, Committee Hansard, 8 August 2012, pp. 6–7.

[33] RBA, Submission 33, p. 6.

[34] Commonwealth Bank of Australia, Submission 81, p. 37.

[35] Treasury, Submission 120, p. 12.

[36] Mr Richard Gray, Executive Director of Regulatory Reform, Group Finance, Westpac Group, Committee Hansard, 9 August 2012, p. 8. Perhaps borrowing a famous quote from Yes, Minister, Mr Tate from Westpac acknowledged that it would be a 'courageous decision' for a bank to rally against greater regulation following the global financial crisis.

[37] Mr Steven Münchenberg, Chief Executive Officer, Australian Bankers' Association, Committee Hansard, 8 August 2012, p. 17.

[38] Westpac, Submission 34, p. 3.

[39] Mr Vaughn Richtor, Chief Executive Officer, ING Bank (Australia), Committee Hansard, 10 August 2012, p. 31.

[40] Mr Graham Hodges, Deputy Chief Executive Officer, ANZ Banking Group, Committee Hansard, 9 August 2012, p. 23.

[41] Mr Tony Burke, Policy Director, Australian Bankers' Association, Committee Hansard, 8 August 2012, p. 18.

[42] Australian Bankers' Association, Submission 46, pp. 5–6.

[43] See www.sec.gov/comments/s7-41-11/s74111.shtml.

[44] National Australia Bank, Submission 79, p. 7 (emphasis omitted).

[45] Australian Bankers' Association, Submission 46, p. 6

[46] Mr Tony Burke, Policy Director, Australian Bankers' Association, Committee Hansard, 8 August 2012, p. 18.

[47] Mr Bart Hellemans, Chief Risk Officer, ING Bank (Australia) Ltd, Committee Hansard, 10 August 2012, p. 33.

[48] Joint communiqué by France, Germany, Italy, Spain, the United Kingdom and the United States on the occasion of the publication of the Model Intergovernmental Agreement to Improve Tax Compliance and Implement FATCA, 26 July 2012, www.treasury.gov/press-center/press-releases/Documents/joint%20communique.pdf (accessed 6 September 2012).

[49] See www.treasury.gov.au/ConsultationsandReviews/Submissions/2012/Intergovernmental-agreement-to-implement-FATCA.

[50] The Hon. Wayne Swan MP, 'Australia and the US commence discussions on Foreign Account Tax Compliance Act', Media release, 7 November 2012.

[51] US Senate Committee on Homeland Security and Governmental Affairs, Permanent Subcommittee on Investigations, U.S. Vulnerabilities to Money Laundering, Drugs, and Terrorist Financing: HSBC Case History, July 2012.

[52] 'Bank Standard Chartered settles Iran probe for $US340m', Sydney Morning Herald, 15 August 2012, www.smh.com.au/business/world-business/bank-standard-chartered-settles-iran-probe-for-us340m-20120815-2479j.html (accessed 6 September 2012).

[53] The Libor for each currency is calculated based on submissions from a selection of large, active banks, which respond to the question: 'At what rate could you borrow funds, were you to do so by asking for and then accepting inter-bank offers in a reasonable market size just prior to 11 am?'. A certain number of the highest and lowest submissions are omitted and an average rate is calculated from the remainder.

[54] US Department of Justice, 'Barclays Bank PLC Admits Misconduct Related to Submissions for the London Interbank Offered Rate and the Euro Interbank Offered Rate and Agrees to Pay $160 Million Penalty', Media release, 27 June 2012, www.justice.gov/opa/pr/2012/June/12-crm-815.html (accessed 6 September 2012).

[55] 'Timeline: Barclays' widening Libor-fixing scandal', BBC News, www.bbc.co.uk/news/
business-18671255 (accessed 7 September 2012).

[56] Private proceedings have also been instituted; in August 2012 The Economist reported that at least 28 lawsuits had been filed, with cases brought by small banks and mutual funds; 'Suing the banks: Blood in the water', The Economist, 4 August 2012, p. 59.

[57] Dr Guy Debelle, Assistant Governor, Financial Markets, RBA, Committee Hansard, 9 August 2012, p. 39.

[58] Dr Guy Debelle, RBA, Committee Hansard, 9 August 2012, p. 39.

[59] Dr Guy Debelle, RBA, Committee Hansard, 9 August 2012, p. 39.

Chapter 3 - Basel III

[1] Bank for International Settlements, 'G10 central bank governors and heads of supervision endorse the publication of the revised capital framework', Media release, 26 June 2004, www.bis.org/press/p040626.htm (accessed 21 March 2012).

[2] Bank for International Settlements, 'About the Basel Committee' www.bis.org/bcbs/about.htm (accessed 2 April 2012).

[3] Bank for International Settlements, 'History of the Basel Committee and its Membership' www.bis.org/bcbs/history.htm (accessed 2 April 2012).

[4] Dr John F Laker, Chairman, APRA, 'APRA's Basel III implementation: introductory remarks', APRA Finsia Workshop, 23 November 2011, Sydney, www.apra.gov.au/Speeches/Documents/
APRA-Finsia%20Basel%20III%20Implementation%2023%20November%202011.pdf (accessed 17 July 2012), p. 2.

[5] Basel Committee on Banking Supervision, International convergence of capital measurement and capital standards, July 1988.

[6] Bank for International Settlements, 'History of the Basel Committee and its Membership' www.bis.org/bcbs/history.htm (accessed 2 April 2012).

[7] Adam Gorajek and Grant Turner, 'Australian Bank Capital and the Regulatory Framework', RBA Bulletin, September quarter 2010, p .44.

[8] Dr John F Laker, Chairman, APRA, 'The Basel II Framework – Some thoughts on Pillar 2', address to the Economic Society of Australia, Melbourne, 28 September 2005, www.apra.gov.au/Speeches/NewDocLib2/The-Basel-II-Framework-Some-thoughts-on-Pillar-2.pdf (accessed 2 April 2012), p. 1.

[9] Kevin Dowd et al., 'Capital inadequacies: the dismal failure of the Basel regime of bank capital regulation', Policy Analysis, Cato Institute, no. 681, 29 July 2011, p. 2.

[10] Bank for International Settlements, 'G10 central bank governors and heads of supervision endorse the publication of the revised capital framework', Media release, 26 June 2004, www.bis.org/press/p040626.htm (accessed 21 March 2012).

[11] House of Commons Treasury Committee (UK), Banking Crisis: regulation and supervision, fourteenth report of session 2008–09, July 2009, p. 31.

[12] Kevin Dowd et al., 'Capital inadequacies: the dismal failure of the Basel Regime of Bank Capital Regulation', Policy Analysis, Cato Institute, no. 681, 29 July 2011, p. 2.

[13] However, Professor Moosa argues that Basel II actually contributed to the global financial crisis and the current European debt crisis as the banks worked on compliance with the accord from 2005, with most fully compliant from 2008. In doing this, banks were encouraged to accumulate more asset-backed securities and sovereign debt. See Submission 100, p. 11.

[14] Associate Professor Chris Terry, 'The new Basel Capital Accord: A major advance at a turbulent time', Agenda, vol. 16, no. 1, 2009, ANU, pp. 32, 33 (footnotes omitted).

[15] House of Commons Treasury Committee (UK), Banking Crisis: regulation and supervision, July 2009, p. 32.

[16] Stefan Walter, Secretary General, Basel Committee on Banking Supervision, 'Basel III and Financial Stability', address to the biennial Conference on Risk Management and Supervision, Bank for International Settlements, Basel, 3–4 November 2010 www.bis.org/speeches/
sp101109a.htm (accessed 2 April 2012).

[17] APRA, Submission 55, p. 2.

[18] Mr Graham Hodges, Deputy Chief Executive Officer, ANZ Banking Group, Committee Hansard, 9 August 2012, pp. 22–23.

[19] Notably, the United States has not yet implemented the amendments brought in by Basel 2.5.
A key reason is the Dodd-Frank Wall Street Reform and Consumer Protection Act, which prohibits reference to, or requirement of reliance on credit ratings, in U.S. regulations. Credit rating agencies have a role in calibrating capital charges under Basel 2.5. 'Bank capital: Half‑cocked Basel', The Economist, 7 January 2012, vol. 401, no. 8766, p. 69; U.S. Securities and Exchange Commission, 'Credit Rating Agencies', www.sec.gov/spotlight/dodd-frank/
creditratingagencies.shtml (accessed 18 May 2012).

[20] Resecuritisations are securitisations that have underlying securitisation positions. The Basel Committee defines them as 'a securitisation exposure in which the risk associated with an underlying pool of exposures is tranched and at least one of the underlying exposures is a securitisation exposure. In addition, an exposure to one or more resecuritisation exposures is a resecuritisation exposure'. An example of a resecuritsation exposure would be a collateralised debt obligation (a security backed by a pool of assets) backed by residential mortgage-backed securities. Basel Committee on Banking Supervision, Enhancements to the Basel II framework, July 2009, p. 2.

[21] Basel Committee on Banking Supervision, 'Enhancements to the Basel II framework', Media release, July 2009, www.bis.org/publ/bcbs157.htm (accessed 18 May 2012).

[22] APRA, Submission 55, p. 3.

[23] Leaders' Declaration, Third G20 Leaders' Summit (Pittsburgh, USA), 25 September 2009, www.g20mexico.org/images/stories/docs/eng/pittsburgh.pdf (accessed 21 March 2012) [p. 8].

[24] Leaders' Declaration, Fifth G20 Leaders' Summit (Seoul, South Korea), 12 November 2010, www.g20.utoronto.ca/2010/g20seoul.pdf (accessed 21 March 2012), p. 2.

[25] Final Declaration, Sixth G20 Leaders' Summit (Cannes, France), 4 November 2011,
www.g20-g8.com/g8-g20/g20/english/for-the-press/news-releases/cannes-summit-final-declaration.1557.html (accessed 23 July 2012) paragraph 23.

[26] Mr Keith Chapman, Executive General Manager, Diversified Institutions Division, APRA, Committee Hansard, 9 August 2012, p. 50.

[27] Basel Committee on Banking Supervision, 'International regulatory framework for banks (Basel III)', www.bis.org/bcbs/basel3.htm (accessed 28 March 2012).

[28] Basel Committee on Banking Supervision, Basel III: A global regulatory framework for more resilient banks and banking systems, December 2010 (revised June 2011), p. 2.

[29] The capital distribution constraints are restrictions on the payment of dividends, share buybacks and discretionary bonus payments to staff. See Basel Committee on Banking Supervision, Basel III: A global regulatory framework for more resilient banks and banking systems, December 2010 (revised June 2011), p. 56.

[30] Stable funding is defined as the portion of those types and amounts of equity and liability financing expected to be reliable sources of funds over a one-year time horizon under conditions of extended stress. Basel Committee on Banking Supervision, Basel III: International framework for liquidity risk measurement, standards and monitoring, December 2010, pp. 25–26.

[31] APRA, Discussion Paper: Implementing Basel III capital reforms in Australia, September 2011, p. 10.

[32] Mrs Lyn Cobley, Executive General Manager, Group Treasury, Commonwealth Bank of Australia, Committee Hansard, 9 August 2012, p. 30.

[33] Mr Steven Münchenberg, Chief Executive Officer, Australian Bankers' Association, Committee Hansard, 8 August 2012, p. 25.

[34] Westpac, Submission 34, p. 3.

[35] Mr Jim Tate, Acting Chief Operating Officer, Australian Financial Services, Westpac Group, Committee Hansard, 9 August 2012, p. 3.

[36] Philip Lowe, Deputy Governor, RBA, 'Bank Regulation and the Future of Banking', address to the 41st Australian Conference of Economists, Melbourne, 11 July 2012, www.rba.gov.au/
speeches/2012/sp-dg-110712.html (accessed 17 July 2012).

[37] Professor Imad Moosa, Submission 100, p. 4.

[38] See Professor Milind Sathye, Submission 31, pp. 4–7.

[39] Professor Kevin Davis, Australian Centre for Financial Studies, Committee Hansard, 8 August 2012, p. 36.

[40] APRA, Submission 55, cover letter from Dr Laker dated 31 May 2012.

[41] Australian Bankers' Association, Submission 46, p. 30.

[42] Basel Committee on Banking Supervision, The Basel Committee’s response to the financial crisis: report to the G20, October 2010, p. 2. See also An assessment of the long-term economic impact of stronger capital and liquidity requirements, August 2010.

[43] Dr Guy Debelle, Assistant Governor, Financial Markets, RBA, Committee Hansard, 9 August 2012, p. 39.

[44] Dr John F Laker, Chairman, APRA, 'Bank regulation and the future of banking', address to the 41^st Australian Conference of Economists, Melbourne, 11 July 2012, www.apra.gov.au/Speeches/Documents/John%20Laker's%20%20Australian%20
Economic%20Forum%2011%20July%202012.pdf (accessed 23 July 2012).

[45] Mr Steven Münchenberg, Chief Executive Officer, Australian Bankers' Association, Committee Hansard, 8 August 2012, p. 28.

[46] Professor Kevin Davis, Australian Centre for Financial Studies, Committee Hansard, 8 August 2012, p. 36.

[47] Reforms to the counterparty credit risk framework become effective on 1 January 2013.

[48] While the implementation timetable in Australia is often described as 'accelerated', an APRA official claimed that this characterisation 'is not quite reality'. He stated that 'We [APRA] are starting the Basel reforms on the earliest date that Basel agreed they should be started. Basel has allowed countries to choose to start later, but there is no need in the Australian case to do so'; Mr Charles Littrell, Executive General Manager, Policy, Research and Statistics Division, APRA, Committee Hansard, 9 August 2012, p. 51. However, the phrase 'accelerated timetable' has been used by the APRA chairman to describe APRA's approach; see Dr John F Laker, Chairman, APRA, 'APRA's Basel III implementation: Introductory remarks', address to the APRA Finsia workshop, Sydney, 23 November 2011, www.apra.gov.au/Speeches/Documents/
APRA-Finsia%20Basel%20III%20Implementation%2023%20November%202011.pdf (accessed 29 August 2012), p. 6.

[49] The chairman of APRA has described the accelerated timetable as 'a vote of confidence, on APRA's part, in the strength of the Australian banking system', although he acknowledged that 'not everyone saw it that way'. Dr John F Laker, Chairman, APRA, 'APRA's Basel III implementation: Introductory remarks', address to the APRA Finsia workshop, Sydney, 23 November 2011, www.apra.gov.au/Speeches/Documents/APRA-Finsia%20Basel%
20III%20Implementation%2023%20November%202011.pdf (accessed 3 April 2012), p. 5.

[50] APRA, Discussion Paper: Implementing Basel III capital reforms in Australia, September 2011, p. 8.

[51] APRA, Submission 55, p. 4. In August 2012, APRA released a discussion paper on the counterparty credit risk capital framework and other aspects of the capital reforms in August 2012. The final prudential standards, reporting standards and guidelines on these matters were released in November 2012. Although the counterparty credit risk framework becomes effective on 1 January 2013 under the Basel Committee's timetable, given the relatively short time between the Basel Committee's release of the final counterparty credit risk measures and the effective date of these measures, APRA has indicated that ADIs may 'prepare counterparty credit risk capital calculations on a "best endeavours" basis until their first annual reporting period beginning on or after 1 July 2013. APRA, Response to Submissions: Implementing Basel III capital reforms in Australia—counterparty credit risk and other measures, November 2012, p. 15.

[52] APRA, Submission 55, p. 6.

[53] Associate Professor Chris Terry, 'The new Basel Capital Accord: A major advance at a turbulent time', Agenda, vol. 16, no. 1, 2009, ANU, p. 33.

[54] APRA, Submission 55, p. 5.

[55] Australian Bankers' Association, Submission 46, pp. 4, 6.

[56] Australian Bankers' Association, Submission 46, pp. 6–7.

[57] Mr Steven Münchenberg, Chief Executive Officer, Australian Bankers' Association, Committee Hansard, 8 August 2012, p. 17.

[58] Mr Mark Joiner, Executive Director and Chief Financial Officer, National Australia Bank, Committee Hansard, 10 August 2012, pp. 70–71.

[59] Dr John F Laker, Chairman, APRA, 'APRA's Basel III implementation: Introductory remarks', address to the APRA Finsia workshop, Sydney, 23 November 2011, www.apra.gov.au/
Speeches/Documents/APRA-Finsia%20Basel%20III%20Implementation%2023%
20November%202011.pdf (accessed 23 July 2012), p. 6.

[60] Mr Steven Münchenberg, Chief Executive Officer, Australian Bankers' Association, Committee Hansard, 8 August 2012, p. 17.

[61] Mr Jim Murphy, Executive Director, Markets Group, Treasury, Committee Hansard, 8 August 2012, p. 6.

[62] Professor Kevin Davis, Australian Centre for Financial Studies, Committee Hansard, 8 August 2012, p. 42.

[63] Mr Jim Murphy, Executive Director, Markets Group, Treasury, Committee Hansard, 8 August 2012, p. 6.

[64] APRA, Submission 55, p. 4.

[65] Commonwealth Bank of Australia, Submission 81, p. 3 (footnotes omitted).

[66] Dr John F Laker, Chairman, APRA, 'APRA's Basel III implementation: introductory remarks', address to the APRA Finsia Workshop, Sydney, 23 November 2011, www.apra.gov.au/
Speeches/Documents/APRA-Finsia%20Basel%20III%20Implementation%2023%20November
%202011.pdf (accessed 17 July 2012), p. 3.

[67] Mr Charles Littrell, Executive General Manager, Policy, Research and Statistics Division, APRA, Committee Hansard, 9 August 2012, p. 53.

[68] Mr Charles Littrell, APRA, 'APRA's Basel III Implementation: Rationale and Impacts', address to the APRA Finsia Workshop, 23 November 2011, www.apra.gov.au/Speeches/Documents/
APRA-Finsia%20Basel%20III%20Implementation%2023%20November%202011%20CW
L%202.pdf (accessed 17 July 2012), pp. 2–3.

[69] Mr Keith Chapman, APRA, Committee Hansard, 9 August 2012, p. 53.

[70] Australian Bankers' Association, Submission 46, p. 7. See also Commonwealth Bank of Australia, Submission 81, p. 3.

[71] Mrs Lyn Cobley, Executive General Manager, Group Treasury, Commonwealth Bank of Australia, Committee Hansard, 9 August 2012, p. 26.

[72] RBS Macro Credit Research, The Revolver, 24 May 2012, p. 7; cited in Commonwealth Bank of Australia, Submission 81, p. 4.

[73] Mr Graham Hodges, Deputy Chief Executive Officer, ANZ Banking Group, Committee Hansard, 9 August 2012, p. 19.

[74] Mr Charles Littrell, APRA, Committee Hansard, 9 August 2012, pp. 51–52.

[75] The IMF report stated 'APRA has done well to take national circumstances and experiences into account to make the appropriate choices of national discretion items in Pillar 1 of the Basel II framework. This has led to the view that reported minimum Tier 1 capital ratios for the major banks are lower than would otherwise be the case. However, actual levels of capital held by banks in various jurisdictions are affected by many factors. Great care is needed in interpreting these results. APRA is correct to distance itself from the type of specific comparison between countries that banks are publishing'. International Monetary Fund, Australia: Basel II Implementation Assessment, May 2010, p. 3.

[76] See Mr Graham Hodges, Deputy Chief Executive Officer, ANZ Banking Group, Committee Hansard, 9 August 2012, p. 19.

[77] Mr Keith Chapman, APRA, Committee Hansard, 9 August 2012, p. 52.

[78] APRA, Response to Submissions II: Implementing Basel III capital reforms in Australia, September 2012, p. 10.

[79] Mr Mark Degotardi, Head of Public Affairs, Abacus-Australian Mutuals, Committee Hansard, 9 August 2012, p. 12.

[80] Mr Mark Degotardi, Abacus-Australian Mutuals, Committee Hansard, 9 August 2012, p. 14.

[81] See Abacus-Australian Mutuals, Submission 150, p. 3.

[82] Mr Charles Littrell, APRA, Committee Hansard, 9 August 2012, p. 60.

[83] APRA, Submission 55, p. 6.

[84] Professor Milind Sathye, Submission 31, p. 7.

[85] Professor Milind Sathye, Submission 31, p. 8.

[86] Mr Glenn Baker, Chief Financial Officer, ING Bank (Australia) Ltd, Committee Hansard, 10 August 2012, p. 32. Mr Baker noted that although other regulators 'have a concept for less stable deposits', in his view 'APRA seems to add internet as an additional category over and above stable, less stable et cetera'.

[87] Mr Michael Saadat, Senior Manager, Deposit Takers and Issuers, ASIC, Committee Hansard, 8 August 2012, p. 53.

[88] ASIC, 'Term deposits that are only breakable on 31 days' notice: Proposals for relief', Consultation Paper 169, November 2011, p. 5.

[89] Abacus-Australian Mutuals, Submission 150, pp. 7–8.

[90] Abacus-Australian Mutuals, Submission 150, p. 8.

[91] Mr Peter Kell, Commissioner, ASIC, Committee Hansard, 9 August 2012, p. 53.

[92] The Basel Committee notes that '[r]ather than rely mechanistically on the credit/GDP guide, authorities are expected to apply judgment in the setting of the buffer in their jurisdiction after using the best information available to gauge the build-up of system-wide risk'; although it does not consider that the internationally-consistent credit/GDP guide should be 'totally ignored'. Basel Committee on Banking Supervision, Guidance for national authorities operating the countercyclical capital buffer, December 2010, pp. 3, 4.

[93] RBA and APRA, Macroprudential Analysis and Policy in the Australian Financial Stability Framework, September 2012, pp. 19–20 (footnotes omitted).

[94] The committee notes that APRA intends to consult on this measure in early 2013; APRA, Response to Submissions II: Implementing Basel III capital reforms in Australia, September 2012, p. 8.

Chapter 4 - The sources and costs of bank funds post-GFC

[1] Owen Freestone et al., 'The rise in household saving and its implications for the Australian economy', Treasury Economic Roundup, 2011, issue 2, p. 71.

[2] For example, Dr Guy Debelle, Assistant RBA Governor, Financial Markets, observes that in the US, changes to the federal funds rate by the Federal Reserve have less direct influence on existing mortgages, such as 30 year fixed rate mortgages; Dr Guy Debelle, 'Bank Funding', address to the Australian DCM Summit 2012, Sydney, 22 March 2012, www.rba.gov.au/
speeches/2012/sp-ag-220312.html (accessed 25 July 2012).

[3] Although RBA Assistant Governor Dr Guy Debelle observed that while the standard variable interest rate mostly moved in line with changes to the cash rate, banks increased the discounts they offered on home loans between decisions on the cash rate. Dr Guy Debelle, Committee Hansard, 9 August 2012, p. 37.

[4] RBA, Submission 33, p. 4 (footnotes omitted).

[5] Dr Guy Debelle, Assistant Governor, Financial Markets, RBA, Committee Hansard, 9 August 2012, p. 36.

[6] RBA, Submission 33, p. 1.

[7] Dr Guy Debelle, RBA, Committee Hansard, 9 August 2012, p. 37.

[8] Dr Guy Debelle, RBA, Committee Hansard, 9 August 2012, p. 36.

[9] Dr Guy Debelle, RBA, 'Bank Funding', address to the Australian DCM Summit 2012, Sydney, 22 March 2012, www.rba.gov.au/speeches/2012/sp-ag-220312.html (accessed 25 July 2012).

[10] Senate Economics References Committee, Competition within the Australian banking sector, May 2011, p. xvii (emphasis omitted).

[11] Such as Westpac's 2009 attempt to explain its funding costs through a video based on the cost of bananas: see Julian Lee, 'Westpac goes bananas with email on rationale behind rate rise', Sydney Morning Herald, 10 December 2009, www.smh.com.au/business/westpac-goes-bananas-with-email-on-rationale-behind-rate-rise-20091208-khog.html (accessed 31 August 2012).

[12] Mr Cameron Clyne, Chief Executive Officer and Managing Director, National Australia Bank, Committee Hansard, Competition Inquiry, 13 December 2010, p. 51.

[13] ANZ, 'ANZ cuts interest rates for mortgages and small business lending by 0.25% pa', Media release, 8 December 2011, p. 1.

[14] Australian Centre for Financial Studies, Submission 49, pp. 13–14.

[15] RBA, Submission 33, p. 5.

[16] RBA, Submission 33, p. 5.

[17] Mr Mark Joiner, Executive Director, Finance, National Australia Bank, Committee Hansard, 10 August 2012, p. 68.

[18] Owen Freestone et al., 'The rise in household saving and its implications for the Australian economy', Treasury Economic Roundup, issue 2, 2011, p. 62.

[19] Australia Bankers' Association, Submission 46, p. 13.

[20] Cameron Deans and Chris Stewart, 'Banks' Funding Costs and Lending Rates', RBA Bulletin, 2012, no. 1 (March), p. 38.

[21] RBA, Submission 33, p. 5.

[22] Mr Jim Tate, Acting Chief Operating Officer, Australian Financial Services, Westpac Group, Committee Hansard, 9 August 2012, p. 2.

[23] Mr Graham Hodges, Deputy Chief Executive Officer, ANZ Banking Group, Committee Hansard, 9 August 2012, p. 18.

[24] Mr Mark Degotardi, Head of Public Affairs, Abacus-Australian Mutuals, Committee Hansard, 9 August 2012, p. 13.

[25] Mr Graham Hodges, ANZ Banking Group, Committee Hansard, 9 August 2012, p. 17.

[26] Long-term debt securities are usually bought by larger institutional investors for a fixed term, generally of up to five years. Short-term debt securities are issued with less than 12 months to maturity. The most common securities issued by banks are short-term certificates of deposit with maturity dates of up to three months. The 30-day and 90-day bank bill swap rates (BBSW) price the major banks' short term debt securities.

[27] Mr Jim Tate, Westpac Group, Committee Hansard, 9 August 2012, p. 2.

[28] Mr Ian Beckett, Acting General Manager, Financial System Division, Treasury, Committee Hansard, 8 August 2012, p. 5.

[29] Cameron Deans and Chris Stewart, 'Banks' Funding Costs and Lending Rates', RBA Bulletin, 2012, issue 1 (March), pp. 40–41.

[30] RBA, Submission 33, p. 5.

[31] Mr Graham Hodges, Deputy Chief Executive Officer, ANZ Banking Group, Committee Hansard, 9 August 2012, p. 18.

[32] Susan Black, Anthony Brassil and Mark Hack, 'Recent Trends in Australian Banks' Bond Issuance', RBA Bulletin, 2010, issue 1 (March), p. 29 (footnotes omitted).

[33] Dr Guy Debelle, 'Bank Funding', address to the Australian DCM Summit 2012, Sydney, 22 March 2012, www.rba.gov.au/speeches/2012/sp-ag-220312.html (accessed 25 July 2012).

[34] Cameron Deans and Chris Stewart, 'Banks' Funding Costs and Lending Rates', RBA Bulletin, 2012, issue 1 (March), p. 41.

[35] This policy was announced as part of the government's 2010 Competitive and Sustainable Banking System package—the legislative amendments commenced on 24 October 2011.

[36] Treasury, Submission 120, p. 16.

[37] Cameron Deans and Chris Stewart, 'Banks' Funding Costs and Lending Rates', RBA Bulletin, 2012, issue 1 (March), p. 39. That covered bonds are being issued for terms of five to ten years was supported by the ANZ's evidence; see Committee Hansard, 9 August 2012, p. 18.

[38] The explanatory memorandum for the legislation notes this process involves the participating ADIs establishing a new entity, called the aggregating entity (that is not an ADI), which would issue a debt instrument secured by covered bonds issued by each of the ADIs to the aggregating entity. Explanatory memorandum, Banking Amendment (Covered Bonds) Bill 2011, paragraphs 1.41–1.44.

[39] Mr Bart Hellemans, Chief Risk Officer; Mr Glenn Baker, Chief Financial Officer, ING Bank (Australia) Ltd, Committee Hansard, 10 August 2012, p. 38.

[40] See Senate Economics References Committee, Competition within the Australian banking sector, May 2011, p. 243.

[41] Mr Charles Littrell, Executive General Manager, Policy, Research and Statistics, APRA, 'Prudential issues in securitisation', address to the Australian Securitisation Forum, Sydney, 21 November 2011, www.apra.gov.au/Speeches/Documents/speech%20PRUDENTIAL%20
ISSUES%20IN%20SECURITISATION%20ASF%2021%2011%2011.pdf (accessed 30 March 2012).

[42] AOFM, 'AOFM participation in RMBS transactions' www.aofm.gov.au/content/rmbs.asp (accessed 26 July 2012).

[43] Mr Robert Nicholl, Chief Executive Officer, AOFM, Proof Committee Hansard, 21 September 2012, p. 7.

[44] Mr Jim Murphy, Executive Director, Markets Group, Treasury, Committee Hansard, 8 August 2012, pp. 3, 9.

[45] Mr Jim Murphy, Treasury, Committee Hansard, 8 August 2012, p. 7.

[46] See Committee Hansard, 8 August 2012, p. 7.

[47] Mr Graham Hodges, Deputy Chief Executive Officer, ANZ Banking Group, Committee Hansard, 9 August 2012, p. 20.

[48] Dr Guy Debelle, RBA, Committee Hansard, 9 August 2012, p. 40.

[49] Mr Jim Tate, Acting Chief Operating Officer, Australian Financial Services, Westpac Group, Committee Hansard, 9 August 2012, p. 4.

[50] Such as Australian government bonds and the overnight indexed swap rate.

[51] Cameron Deans and Chris Stewart, 'Banks' Funding Costs and Lending Rates', RBA Bulletin, 2012, no. 1 (March), pp. 40.

[52] Mr Jim Murphy, Executive Director, Markets Group, Treasury, Committee Hansard, 8 August 2012, p. 5.

[53] Dr Guy Debelle, RBA, 'Bank Funding', address to the Australian DCM Summit 2012, Sydney, 22 March 2012, www.rba.gov.au/speeches/2012/sp-ag-220312.html (accessed 25 July 2012).

[54] Mr Graham Hodges, Deputy Chief Executive Officer, ANZ Banking Group, Committee Hansard, 9 August 2012, p. 17; Mr Mark Joiner, Executive Director, Finance, National Australia Bank, Committee Hansard, 10 August 2012, p. 74.

[55] Mr Mark Joiner, National Australia Bank, Committee Hansard, 10 August 2012, p. 74.

[56] Mr Jim Tate, Westpac Group, Committee Hansard, 9 August 2012, pp. 4–5.

[57] Mr Jim Tate, Westpac Group, Committee Hansard, 9 August 2012, p. 5.

[58] Mr Graham Hodges, ANZ Banking Group, Committee Hansard, 9 August 2012, p. 20.

[59] Mr Mark Degotardi, Head of Public Affairs, Abacus-Australian Mutuals, Committee Hansard, 9 August 2012, p. 13.

[60] KPMG and the Australian Centre for Financial Studies, The future of Australian bank funding, March 2011, pp. 3, 4. The International Monetary Fund has previously noted similar issues—see Australia: Basel II Implementation Assessment, May 2010, p. 3.

[61] Professor Milind Sathye, Submission 31, p. 11.

[62] International Monetary Fund, Australia: Basel II Implementation Assessment, May 2010, p. 29.

[63] Mr Graham Hodges, Deputy Chief Executive Officer, ANZ Banking Group, Committee Hansard, 9 August 2012, p. 20.

[64] Australian Centre for Financial Studies, Submission 49, p. 5.

[65] International Monetary Fund, A fair and substantial contribution by the financial sector: Final report for the G20, June 2010, p. 14; cited in Australian Centre for Financial Studies, Submission 49, p. 6.

[66] ANZ, 2011 Annual Report, p. 78.

[67] Mr Mark Joiner, Executive Director, Finance, National Australia Bank, Committee Hansard, 10 August 2012, p. 69.

Chapter 5 - Where to from here? Possible responses to changing funding mix and costs

[1] Australia’s future tax system: Report to the Treasurer, part 2: detailed analysis, vol. 1, p. 4.

[2] Notes: Real effective marginal tax rates show the tax levied on the normal real return to saving, and reflect the tax treatment of the income from which savings are made (where it deviates from tax payable if that income had been immediately consumed), earnings on those savings, and the final use of the accumulated savings. A zero effective tax rate corresponds to an expenditure tax benchmark, with the investment funded out of post-tax wages, and earnings and the subsequent realisation of the investment untaxed. The negative rate for superannuation reflects the reduction in tax otherwise payable on wages by making contributions out of pre-tax income. The estimates do not model interactions with the transfer system. Assumptions: 6 per cent nominal return; 2.5 per cent inflation; for rental property, 50 per cent of the return is attributable to capital gain and 50 per cent to rental income and the rental property is held for seven years then sold; shares are held for seven years then sold; superannuation is held for 25 years and the individual is eligible for a tax-free payout at the end of the period.

[3] Mr Steven Münchenberg, Chief Executive Officer, Australian Bankers' Association, Committee Hansard, 8 August 2012, p. 15.

[4] Abacus-Australian Mutuals, Submission 150, p. 7.

[5] Dr Guy Debelle, Assistant Governor, Financial Markets, RBA, Committee Hansard, 9 August 2012, p. 38.

[6] Abacus-Australian Mutuals, Submission 150, p. 6.

[7] Mr Steven Münchenberg, Chief Executive Officer, Australian Bankers' Association, Committee Hansard, 8 August 2012, p. 16.

[8] Mr Vaughn Richtor, Chief Executive Officer, ING Bank (Australia), Committee Hansard, 10 August 2012, p. 30.

[9] Susan Black, Anthony Brassil and Mark Hack, 'Recent Trends in Australian Banks' Bond Issuance', RBA Bulletin, 2010, no. 1 (March), p. 28.

[10] Australian Financial Markets Association, Submission 87, p. 6.

[11] Australian Securitisation Forum, Submission 150, p. 7.

[12] Mr Mark Joiner, Executive Director, Finance, National Australia Bank, Committee Hansard, 10 August 2012, p. 67.

[13] Mr Mark Joiner, National Australia Bank, Committee Hansard, 10 August 2012, p. 68.

[14] Kevin Davis, Can a Corporate Bond Market solve the Super Equity Bias?, 19 March 2012, www.australiancentre.com.au/publications-and-articles/2012/03212012-davis-corporate-bond-market-super-equity-bias-commentary.pdf (accessed 13 September 2012), p. 1; cited in Australian Centre for Financial Studies, Submission 49, p. 7.

[15] Kevin Davis, Can a Corporate Bond Market solve the Super Equity Bias?, 19 March 2012, www.australiancentre.com.au/publications-and-articles/2012/03212012-davis-corporate-bond-market-super-equity-bias-commentary.pdf (accessed 13 September 2012), p. 2; cited in Australian Centre for Financial Studies, Submission 49, p. 7.

[16] Australian Financial Centre Forum, Australia as a financial centre: Building on our strengths, November 2009, p. 40. The report also noted that a deeper corporate bond market could assist financing of large scale, long-term infrastructure projects.

[17] Australian Government, Competitive and Sustainable Banking System, December 2010, p. 24. The government also announced that it would facilitate the trading of Commonwealth Government Securities (CGS) on a securities exchange. Legislation to facilitate CGS retail trading was introduced in June 2012 (Commonwealth Government Securities Legislation Amendment (Retail Trading) Bill 2012). In July 2012 ASIC released a consultation paper on market integrity rules for the CGS retail trading.

[18] See www.treasury.gov.au/ConsultationsandReviews/Submissions/2011/Development-of-the-Retail-Corporate-Bond-Market-Streamlining-Disclosure-and-Liability-Requirements.

[19] Australian Financial Centre Forum, Australia as a Financial Centre: Building on our Strengths, November 2009, p. 68.

[20] As announced in the 2010–11 Budget, the tax rate applying to foreign bank branches would be reduced from the five per cent to 2.5 per cent in 2013–14 and to zero from 2014–15. The rate for other financial institutions would be reduced from 10 per cent to 7.5 per cent in 2013-14 and to five per cent from 2014–15, with an aspirational target of zero. See Australian Government, 2010–11 Budget: Budget paper no. 2, pp. 43–44.

[21] Australian Government, Mid-year economic and fiscal outlook 2011–12, p. 166.

[22] Mr Vaughn Richtor, Chief Executive Officer; Mr Glenn Baker, Chief Financial Officer, ING Bank (Australia) Ltd, Committee Hansard, 10 August 2012, p. 36.

[23] The CMHC was created in 1946 to house returning war veterans and to lead Canada's social and rental housing programs. It currently has three broad objectives: (1) help Canadians in need; (2) facilitate access to more affordable, better quality housing for all Canadians; and (3) ensure the Canadian housing system remains one of the best in the world. See Canada Mortgage and Housing Corporation, 2012–2016 Summary of the corporate plan, www.cmhc-schl.gc.ca/en/corp/about/anrecopl/upload/2012-2016CPSCMHC_E.pdf (accessed 3 September 2012), p. 3

[24] Mortgage and Finance Association of Australia, Submission 52, p. 2.

[25] KPMG, Canada Mortgage Bonds Program evaluation: Final report, June 2008, www.cmhc.ca/en/hoficlincl/in/camobo/upload/CMB-Evaluation-Jun08.pdf (accessed 3 September 2012), p. 7.

[26] Bullet bonds are debt instruments that cannot be redeemed prior to maturity. The face value of the bond is paid on the maturity date, rather than a series of payments occurring over several dates.

[27] KPMG, Canada Mortgage Bonds Program evaluation: Final report, June 2008, www.cmhc.ca/en/hoficlincl/in/camobo/upload/CMB-Evaluation-Jun08.pdf (accessed 3 September 2012), p. 9.

[28] Mr Phil Naylor, Chief Executive Officer, Mortgage and Finance Association of Australia, Committee Hansard, 8 August 2012, p. 30.

[29] Mr Phil Naylor, Mortgage and Finance Association of Australia, Committee Hansard, 8 August 2012, p. 34.

[30] Mortgage and Finance Association of Australia, Submission 52, p. 20.

[31] Professor Kevin Davis, Australian Centre for Financial Studies, Committee Hansard, 8 August 2012, p. 43. In its submission, the Australian Centre for Financial Studies also argues that it would be unlikely to easily achieve "fair pricing" of the government guarantee; Submission 49, p. 12.

[32] Treasury, Submission 167 to House of Representatives Standing Committee on Infrastructure, Transport, Regional Development and Local Government's inquiry into the impact of the global financial crisis on regional Australia, August 2009, p. 8. As at February 2011, this submission still reflected the views of Treasury (which directed this committee to this submission during the Competition Inquiry); see Treasury, answer to question on notice, Competition Inquiry, no. 14, 4 February 2011, pp. 3–4.

[33] Dr Guy Debelle, RBA, Committee Hansard, 9 August 2012, p. 44.

[34] Repurchase agreements (commonly shortened to 'repos') involve the sale or purchase of securities with a commitment to reverse the transaction at an agreed date in the future and at an agreed price. The RBA uses repos to conduct its domestic market operations (i.e. to ensure that the actual cash rate is close to the target cash rate).

[35] Australian Securitisation Forum, Submission 153, p. 7.

Chapter 6 - Implications of the crisis on borrowing and lending practices

[1] As noted by NAB's executive director of finance during the Competition Inquiry, business lending has a lower return on equity than housing lending: both 'regulatory assumptions and the loss history models suggest you will have a lot more problems on the business side than on the housing side'. Mr Mark Joiner, Executive Director, Finance, National Australia Bank, Committee Hansard, Competition Inquiry, 13 December 2010, p. 54.

[2] Mr Jim Murphy, Executive Director, Markets Group, Treasury, Committee Hansard, 8 August 2012, p. 2.

[3] Commonwealth Bank of Australia, Submission 81, p. 32.

[4] Mr Jim Tate, Acting Chief Operating Officer, Australian Financial Services, Westpac Group, Committee Hansard, 9 August 2012, p. 1.

[5] Mr Graham Hodges, Deputy Chief Executive Officer, ANZ Banking Group, Committee Hansard, 9 August 2012, p. 16.

[6] Mr Bart Hellemans, Chief Risk Officer; Mr Glenn Baker, Chief Financial Officer, ING Bank (Australia) Ltd, Committee Hansard, 10 August 2012, p. 37.

[7] FOS, Submission 50, p. 3.

[8] FOS, 2010–2011 Annual Review, p. 23. Thirty-eight per cent of these decisions were in favour of the applicant.

[9] FOS, Submission 50, p. 5.

[10] CPA Australia, Submission 51, attachment A: SME access to finance: recent experiences of SMEs in accessing finance, May 2012, p. 3.

[11] Professor Kevin Davis, Australian Centre for Financial Studies, Committee Hansard, 8 August 2012, p. 40.

[12] Mr Steven Münchenberg, Chief Executive Officer, Australian Bankers' Association, Committee Hansard, 8 August 2012, p. 23.

[13] Mr Steven Münchenberg, Committee Hansard, 8 August 2012, p. 24.

[14] Mr Steven Münchenberg, Committee Hansard, 8 August 2012, p. 24.

[15] Mr Jim Tate, Acting Chief Operating Officer, Australian Financial Services, Westpac Group, Committee Hansard, 9 August 2012, pp. 5–6.

[16] Mr Jim Tate, Westpac Group, Committee Hansard, 9 August 2012, p. 6.

[17] Mr Jim Tate, Westpac Group, Committee Hansard, 9 August 2012, p. 7.

[18] Mr Charles Littrell, Executive General Manager, Policy, Research and Statistics Division, APRA, Committee Hansard, 9 August 2012, p. 56.

[19] Mr Keith Chapman, Executive General Manager, Diversified Institutions Division, APRA, Committee Hansard, 9 August 2012, p. 55.

[20] Anthony Klan, 'Low doc risks rise in loans scramble', The Australian, 26 September 2012, p. 3.

[21] Ms Denise Brailey, President, Banking and Finance Consumers Support Association, Committee Hansard, 8 August 2012, p. 47.

[22] Mr Jim Tate, Westpac Group, Committee Hansard, 9 August 2012, p. 7.

[23] Mr Jim Tate, Westpac Group, Committee Hansard, 9 August 2012, p. 5.

[24] RBA, answer to question on notice, 9 August 2012 (received 20 August 2012), p. 1.

[25] For examples of this enforcement action, see ASIC, answer to question on notice, 8 August 2012 (received 20 September 2012), pp. 4–6.

[26] See ASIC, Report 262: Review of credit assistance providers' responsible lending conduct, focusing on 'low doc' home loans, November 2011.

[27] Mr Michael Saadat, Senior Manager, Deposit Takers and Issuers, ASIC, Committee Hansard, 8 August 2012, p. 54.

[28] ASIC, 'Former mortgage broker pleads guilty to first charges laid under the National Credit Act', Media release, no. 12-237, 25 September 2012.

[29] ASIC, answer to question on notice, 8 August 2012 (received 20 September 2012), p. 7.

[30] Ms Denise Brailey, correspondence to the committee dated 9 October 2012, p. 5 (emphasis omitted).

[31] Australian Securitisation Forum, Submission 153A, p. 3.

[32] Ms Denise Brailey, Committee Hansard, 8 August 2012, p. 44.

[33] Mr Robert Nicholl, Chief Executive Officer, AOFM, Committee Hansard, 21 September 2012, p. 2.

[34] Mr Robert Nicholl, Chief Executive Officer; Mr Michael Bath, Director, Financial Risk, AOFM, Committee Hansard, 21 September 2012, pp. 1, 4.

[35] Mr Robert Nicholl, AOFM, Committee Hansard, 21 September 2012, p. 2.

[36] These independent audits seek to confirm the conformance of the pool with the AOFM's minimum edibility requirements (pool audit) and that a representative sample of mortgages in the pool can be traced back to loan documentation (tie-back audit). See AOFM, 'Purchase of RMBS – Program update', no. 2, 2011 (8 April), www.aofm.gov.au/content/notices/
02_2011.asp (accessed 26 September 2012).

[37] As the AOFM invests in AAA-rated securities, these typically are also senior or mezzanine tranches that are repaid before subordinated tranches. The CEO of the AOFM stated that 'this means that the owners of more heavily subordinated, or 'first loss' tranches, provide additional protection to the AOFM's interests'. Mr Robert Nicholl, AOFM, Committee Hansard, 21 September 2012, p. 2.

[38] Mr Robert Nicholl, AOFM, Committee Hansard, 21 September 2012, pp. 1, 2. The Standard & Poor's figures consisted of 1.26 per cent for prime full‑doc loans and 6.07 per cent for prime low-doc loans.

[39] $400 million out of the $25 billion in mortgages backing the AOFM's investments are low-doc loans. See Mr Robert Nicholl, AOFM, Committee Hansard, 21 September 2012, p. 2.

[40] Mr Robert Nicholl, AOFM, Committee Hansard, 21 September 2012, p. 2.

[41] ASIC, Submission 97, p. 5.

[42] Mr Peter Kell, Commissioner, ASIC, Committee Hansard, 8 August 2012, p. 53.

Chapter 7 - Allegations regarding Bankwest

[1] HBOS's predecessor, the Bank of Scotland, had a majority interest in Bankwest from 1995.

[2] ACCC, 'Commonwealth Bank of Australia—proposed acquisition of BankWest and St Andrew's Australia', Public Competition Assessment, 10 December 2008, p. 10.

[3] Eric Johnston, 'BankWest cool as HBOS falters', Australian Financial Review, 23 June 2008, p. 64.

[4] For example, one borrower noted that Suncorp referred them to Bankwest after declining their application. Other examples were provided by Mr and Mrs Gilbert and Sylvia De Michiel (Submission 5, p. 3) and another borrower whose name has been withheld from publication (Submission 66, p. 2).

[5] Mr Geoff Shannon, Submission 118, p. 8.

[6] Mr Ian Corfield, Chief Executive, Bankwest Business, Bankwest, Committee Hansard, 10 August 2012, p. 53.

[7] For example, Mr Ian Corfield, a senior Bankwest executive, was reported as stating '[o]f course customers want to know their money is safe but we've been able to assure them HBOS is one of the safest banks in the world and HBOS fully underwrites what Bankwest is doing ... People who are investing in, or saving money with, BankWest are absolutely safe. This business is supported by a very strong balance sheet of its own and in turn is backed up by the HBOS balance sheet. People, in my view, are safe as houses'. Katherine Jimenez, 'BankWest parent committed to Australia despite sub-prime woes', The Australian, 12 June 2008, www.theaustralian.com.au/business/bankwest-parent-committed-to-australia/story-e6frg8zx-1111116606559 (accessed 19 April 2012).

[8] Other key events during September 2008 included the rescue of Fannie Mae and Freddie Mac by the US government, the collapse of Lehman Brothers and the announcements by the US government of the Troubled Assets Relief Program (TARP) and a US$85 billion rescue package for AIG.

[9] This is a summary of Lloyds plc's submission to UK regulators as the proposed acquisition was being considered; Office of Fair Trading (UK), Anticipated acquisition by Lloyds TSB plc of HBOS plc: Report to the Secretary of State for Business Enterprise and Regulatory Reform, 24 October 2008, p. 10.

[10] HM Treasury (UK), 'Treasury statement on financial support to the banking industry', Media release, 13 October 2008, webarchive.nationalarchives.gov.uk/+/http://www.hm-treasury.
gov.uk/press_105_08.htm (accessed 11 April 2012); Financial Services Authority (UK), Final Notice: Bank of Scotland plc, 9 March 2012, www.fsa.gov.uk/static/pubs/final/
bankofscotlandplc.pdf (accessed 11 April 2012), p. 32.

[11] Mr Ian Corfield, Bankwest, Committee Hansard, 10 August 2012, p. 53.

[12] Mr Jon Sutton, Committee Hansard, Senate Economics References Committee, Inquiry into aspects of bank mergers, 2 July 2009, p. 8.

[13] Mr Guy Goldrick, Committee Hansard, 10 August 2012, p. 41.

[14] Mr Sean Butler, Committee Hansard, 8 August 2012, p. 66.

[15] This is based on APRA's statistics on the liabilities due to clearing houses and financial institutions, which indicate that Bankwest began to owe $29 million in August 2008, $859 million in September and $3.75 billion by December. IMF Australia, 'Introduction', A timeline for Bankwest, 6 February 2012, www.imf.com.au/pdf/aTimelineForBankwest
Complete.pdf (accessed 14 August 2012), pp. 3–4.

[16] Dr Guy Debelle, Assistant Governor, Financial Markets, RBA, Committee Hansard, 9 August 2012, p. 42.

[17] Commonwealth Bank of Australia, 'Commonwealth Bank of Australia to acquire Bank West and St Andrew's', Media release, 8 October 2008, www.commbank.com.au/about-us/news/media-releases/2008/081008-news-bankwest-acquisition.aspx (accessed 17 April 2012).

[18] Price-to-book ratios for other notable acquisitions include 1.7 paid by CBA to acquire Colonial First State (2000), 1.9 paid by HBOS to acquire Bankwest (2003) and 2.7 for Westpac to acquire St George (2008). CBA Investor Pack, 8 October 2008; cited in ACCC, 'Commonwealth Bank of Australia—proposed acquisition of BankWest and St Andrew's Australia', Public Competition Assessment, 10 December 2008, p. 5.

[19] In addition to the restrictions on mergers and acquisitions contained in the Competition and Consumer Act 2010, under the Financial Sector (Shareholdings) Act 1998 financial sector companies are subject to a 15 per cent shareholding limit although the Treasurer may approve a higher percentage limit on national interest grounds. The Treasurer may also impose conditions on the higher percentage limit. The conditions related to CBA maintaining and growing the Bankwest brand, ATM fees, maintain the Bankwest head office, managing director and core functions in WA, not closing WA branches and also concerned arrangements for affected staff. The Hon. Wayne Swan MP, 'Proposed Acquisition of Bank of Western Australia and St Andrew's by the Commonwealth Bank of Australia', Media release, attachment A, 18 December 2008.

[20] Mr Glenn Stevens, Governor, RBA, Committee Hansard, Competition Inquiry, 13 December 2010, p. 18.

[21] Mr Ralph Norris, Chief Executive Officer, Commonwealth Bank of Australia, Committee Hansard, Competition Inquiry, 15 December 2011, p. 76.

[22] Mr David Cohen, Group General Counsel and Group Executive, Commonwealth Bank of Australia, Committee Hansard, 9 August 2012, p. 24.

[23] Mr Jim Murphy, Executive Director, Markets Group, Treasury, Committee Hansard, 8 August 2012, p. 8.

[24] Mr Ralph Norris, Chief Executive Officer, Commonwealth Bank of Australia, Committee Hansard, Competition Inquiry, 15 December 2010, p. 69.

[25] Commonwealth Bank of Australia, Results presentation for the full year ended 30 June 2010, 11 August 2010, p. 99.

[26] Commonwealth Bank of Australia, Profit announcement for the full year ended 30 June 2010, 11 August 2010, p. 30.

[27] Commonwealth Bank of Australia, Results presentation for the full year ended 30 June 2010, 11 August 2010, p. 99.

[28] Eric Johnston, 'BankWest bad loans prove a headache', Sydney Morning Herald, 12 August 2010, www.smh.com.au/business/bankwest-bad-loans-prove-a-headache-20100811-11zrn.html (accessed 18 April 2012).

[29] Commonwealth Bank of Australia, Results presentation for the full year ended 30 June 2010, 11 August 2010, p. 100.

[30] Commonwealth Bank of Australia, Profit announcement for the full year ended 30 June 2010, 11 August 2010, p. 30.

[31] Mr David Cohen, Group General Counsel and Group Executive, Commonwealth Bank of Australia, Committee Hansard, 9 August 2012, p. 33.

[32] Mr Jim Murphy, Executive Director, Markets Group, Treasury, Committee Hansard, 8 August 2012, p. 8.

[33] Australian Bankers' Association and CPA Australia, 'Applying for a loan: information for small business', Fact sheet, May 2009, www.bankers.asn.au/ArticleDocuments/192/ABA-111090-v1-Fact_Sheet___Applying_for_a_Loan.pdf.aspx, p. 4 (accessed 16 May 2012).

[34] Bankwest, Submission 80, p. 3.

[35] Australian Bankers' Association and CPA Australia, 'Applying for a loan: information for small business', Fact sheet, May 2009, www.bankers.asn.au/ArticleDocuments/192/ABA-111090-v1-Fact_Sheet___Applying_for_a_Loan.pdf.aspx, p. 4 (accessed 16 May 2012).

[36] Bankwest, Submission 80, p. 3.

[37] Bankwest, Submission 80, p. 2.

[38] Name withheld, Submission 94, pp. 3, 5.

[39] Mr Robert Iannello and Ms Nicola Pagano, Submission 76, p. 2.

[40] Mr Nashaat Sedhom, Submission 20, p. 4.

[41] Mr Frank Galea, Submission 21, p. 3.

[42] Mr Sean Butler, Committee Hansard, 8 August 2012, p. 61.

[43] Mr Gilbert and Mrs Sylvia De Michiel, Submission 5, p. 9.

[44] Mr Neil Mackay, Submission 77, p. 6.

[45] Mr David Bone, Submission 71, p. 2.

[46] Mr James Neale, Submission 54, p. 2 [emphasis omitted].

[47] A sale in one line valuation is based on the assumption of a single transaction for the total holding or a sale in one line to one buyer. See Australian Property Institute, Australia and New Zealand valuation and property standards, January 2012, paragraph 4.21.

[48] Mr Geoff Shannon, Submission 118, p. 10.

[49] Mr Nicholas Murphy, Submission 15, p. 2.

[50] In July 2010 the borrower was informed that the facility would be terminated. Ms Fiona Howson, Submission 39, p. 5. Regarding this matter, Bankwest countered that the changes came about in response to additional funding for construction that was requested and reflected the anticipated date of completion of the construction. It also argued that the changes were 'the subject of discussions, emails and documentation with the customer'; Bankwest, answer to question on notice, 10 August 2012 (received 7 September 2012), p. 5. The committee makes no judgment on these competing claims.

[51] Mr Frank Galea, Submission 21, p. 6.

[52] Kelgon Development Corporation Pty Ltd, Submission 4, p. 4.

[53] Name withheld, Submission 14, pp. 2, 3.

[54] Mr Sean Butler, Committee Hansard, 8 August 2012, p. 61.

[55] Mr Robert De Luca, Managing Director, Bankwest, Committee Hansard, 10 August 2012, p. 57.

[56] Mr Geoff Shannon, Committee Hansard, 10 August 2012, p. 21.

[57] Mr Robert De Luca; Mr Ian Corfield, Bankwest, Committee Hansard, 10 August 2012,
pp. 57–58.

[58] Bankwest, answer to question on notice, 10 August 2012 (received 7 September 2012), p. 4.

[59] Mr James Neale, Submission 54, p. 4. See also Mr Geoff Shannon, Submission 118, p. 9.

[60] Mr Ian Corfield, Bankwest, Committee Hansard, 10 August 2012, p. 62.

[61] In his submission, Mr Victor Seeto stated that he was issued a notice of demand which required $21 million to be repaid within 24 hours; Mr Victor Seeto, Submission 106, p. 2. See also Mr Guy Goldrick, Submission 56, p. 5.

[62] For example, see Mr Nicholas Murphy, Submission 15, p. 3.

[63] Mr Trevor Eriksson, Submission 37, p. 9.

[64] Mr Trevor Eriksson, Submission 37, p. 10.

[65] Kelgon Development Corporation Pty Ltd, Submission 4, p. 4.

[66] For example, see Mr Tony Mollison, Submission 18, p. 2, Diane and Max Lock, Submission 32, p. 3, Chadoora Pty Ltd, Submission 35, p. 2.

[67] Mr Trevor Eriksson, Submission 37, p. 9.

[68] Mr Sean Butler, Submission 111, p. 2.

[69] Mr David Cohen, Group General Counsel and Group Executive, Commonwealth Bank of Australia, Committee Hansard, 9 August 2012, p. 32. Bankwest supported this view: see Bankwest, answer to question on notice, 10 August 2012 (received 7 September 2012), pp. 8–9.

[70] Name withheld, Submission 115, p. 1.

[71] Mr Trevor Eriksson, Submission 37, p. 3.

[72] Bankwest, Submission 80, p. 5.

[73] Bankwest, Submission 80, p. 5.

[74] The committee observed that there were 'fairly weak current incentives for practitioners to become more price-competitive' and concluded that the best way to resolve problems of overcharging and over servicing is to open the profession to more entrants. See Senate Economics References Committee, The regulation, registration and remuneration of insolvency practitioners in Australia: the case for a new framework, September 2010, p. 114, chapters 8 and 11.

[75] AJC Enterprises Pty Ltd, Submission 108, pp. 2–3.

[76] See Mr Trevor Eriksson, Submission 37, p. 5.

[77] Mr Sean Butler, Committee Hansard, 8 August 2012, p. 65.

[78] Mr Robert Laut, Submission 28, pp. 2, 3.

[79] Mr Geoff Shannon, Submission 118 , p. 6.

[80] Bankwest, Submission 80, p. 5.

[81] These types of concerns were raised regarding banks other than Bankwest as well: the owner of a restaurant in Newcastle submitted that the valuation report for the property stated that the likely period required to sell would be 12 months, but that the CBA demanded that it be sold in five months. Mr Alan Harrison, Submission 9, p. 3.

[82] Mr and Mrs Bruce and Linda Hathaway, Submission 122, p. 3.

[83] Mr and Mrs Bruce and Linda Hathaway, Submission 122, p. 3.

[84] Mr Geoffrey Reiher, Committee Hansard, 10 August 2012, pp. 5–6.

[85] See Kelgon Development Corporation Pty Ltd, Submission 4; Mr Gilbert and Mrs Sylvia De Michiel, Submission 5; Mr Nashaat Sedhom, Submission 20; Mr David Crisp, Submission 23; Mr Tim Bowman, Submission 57 (relating to the situation of Mr Bowman's parents); and Name withheld, Submission 66.

[86] Name withheld, Submission 29.

[87] Bankwest, Submission 80, p. 5.

[88] Mr Shannon's submission stated that Unhappy Banking 'fully accepts not all people with a grievance against Bankwest have genuine cause to blame the Bank or its actions for the failure of their businesses'. Mr Geoff Shannon, Submission 118, p. 1.

[89] NAB, Submission 79, p. 11.

[90] Mr David Cohen, Group General Counsel and Group Executive, Commonwealth Bank of Australia, Committee Hansard, 9 August 2012, p. 32.

Chapter 8 - Further examination of the Bankwest allegations

[1] St Andrew's Australia is a specialist provider of wealth management and insurance products. St Andrew's is now a wholly owned subsidiary of the Bank of Queensland.

[2] AAP, 'Class action considered against Bankwest', 11 April 2012, www.news.com.au/money/
banking/law-firm-considers-action-on-bankwest/story-e6frfmcr-1226323461827 (accessed 20 April 2012).

[3] HBOS plc, Annual Report and Accounts 2008, p. 63.

[4] Bankwest, 'Bankwest records 2008 loss, now trading profitably', Media release, 30 April 2009.

[5] Commonwealth Bank of Australia, 'Bankwest acquisition update', Statement to the ASX, 30 April 2009.

[6] Scott Murdoch, 'Bad debt provisions crush BankWest result', The Australian, 1 May 2009, www.theaustralian.com.au/business/bad-debt-crushes-bankwest/story-e6frg8zx-1225705532461 (accessed 23 April 2012).

[7] Commonwealth Bank of Australia, Submission 81, p. 21.

[8] Mr James Neale argues that 'if the properties had been sold for their true value the exaggerated impairment by CBA would have been exposed', and the CBA would face claims from Lloyds and the affected borrowers: Submission 54, p. 3.

[9] Mr Geoff Shannon, Committee Hansard, 10 August 2012, p. 21.

[10] Mr Geoff Shannon, Submission 118, p. 11.

[11] Although in addition to these sources, Mr Geoff Shannon noted that he has been informed by 'a very good source that Mr Jon Sutton was in a mad panic to get as many loans as possible into the impairment section prior to June 2010': Committee Hansard, 10 August 2012, p. 21.

[12] HBOS, Report and Accounts 2009, www.lloydsbankinggroup.com/media/pdfs/
investors/2009/2009_HBOS_R&A.pdf (accessed 2 August 2012), p. 40; Bank of Scotland, Report and Accounts 2009, www.lloydsbankinggroup.com/media/pdfs/investors/2009/
2009_BOS_R&A.pdf (accessed 2 August 2012), p. 35.

[13] Mr David Cohen, Group General Counsel and Group Executive, Commonwealth Bank of Australia, Committee Hansard, 9 August 2012, p. 25.

[14] Commonwealth Bank of Australia, Submission 81, pp. 20–21.

[15] Mr David Cohen, Group General Counsel and Group Executive, Commonwealth Bank of Australia, Committee Hansard, 9 August 2012, p. 27.

[16] Commonwealth Bank of Australia, answer to question on notice, 9 August 2012 (received 12 September 2012), p. 3.

[17] Commonwealth Bank of Australia, answer to question on notice, 9 August 2012 (received 12 September 2012), p. 3.

[18] Financial Services Authority (UK), Final Notice: Bank of Scotland plc, 9 March 2012, www.fsa.gov.uk/static/pubs/final/bankofscotlandplc.pdf (accessed 11 April 2012), p. 32.

[19] Financial Services Authority (UK), Final Notice: Bank of Scotland plc, 9 March 2012, www.fsa.gov.uk/static/pubs/final/bankofscotlandplc.pdf (accessed 11 April 2012), pp. 30, 32.

[20] Commonwealth Bank of Australia, answer to question on notice, 9 August 2012 (received 12 September 2012), pp. 3–4.

[21] Commonwealth Bank of Australia, Submission 81, p. 33.

[22] Mr Robert Wall, General Manager, Legal and Risk, Colliers International Holdings (Australia), response to Submission 28, 13 April 2012, p. 1.

[23] Dransfield, Hotel futures 2011: A review of the revenue performance of major Australian hotel markets with forecasts to 2019, December 2011, p. 9. The major hotel markets are comprised of the capital cities, Cairns and the Gold Coast.

[24] Bankwest, Submission 80, p. 5.

[25] Bankwest, answer to question on notice, 10 August 2012 (received 7 September 2012), p. 1.

[26] HBOS plc, Report and Accounts 2009, p. 2.

[27] Mr Bruce Munro, Group Chief Risk Officer, National Australia Bank, Committee Hansard, 10 August 2012, p. 74.

[28] Mr Robert De Luca, Managing Director, Bankwest, Committee Hansard, 10 August 2012, p. 53.

[29] ANZ, Submission 78, p. 21. See APRA, 'The management of collateral and foreclosures', APRA Insight, 2011, issue 2, pp. 12–14.

[30] Mr James Neale, Submission 54, p. 2.

[31] Dransfield, Hotel futures 2010: A review of the revenue performance of major Australian hotel markets with forecasts to 2018, December 2010, p. 9.

[32] Mr Geoffrey Reiher, Committee Hansard, 10 August 2012, p. 1.

[33] Bankwest, Submission 80, p. 5.

[34] Mr Geoff Shannon, Committee Hansard, 10 August 2012, pp. 26, 27. However, Bankwest subsequently contended that the project had seven pre-sales, where one of the pre‑sales had a $1 deposit and another did not have a cash deposit. The bank stated that between September 2008 and July 2009 it provided the borrower in question 'with the opportunity to arrange a sale of the development himself and he made representations that he had a purchaser, but no sale eventuated'. Bankwest further stated that by the time receivers were appointed (1 July 2009), five of the pre-sales had expired with the remaining two due to expire in the coming months. Bankwest, answer to question on notice, 10 August 2012 (received 7 September 2012), p. 3.

[35] Mr Guy Goldrick, Committee Hansard, 10 August 2012, p. 40.

[36] Mr Guy Goldrick, Committee Hansard, 10 August 2012, p. 46.

[37] Mr Guy Goldrick, Committee Hansard, 10 August 2012, p. 46.

[38] Mr Robert De Luca, Bankwest, Committee Hansard, 10 August 2012, p. 61.

[39] Commonwealth Bank of Australia, Profit announcement for the full year ended 30 June 2010, 11 August 2010, p. 30.

[40] Mr Ian Corfield, Bankwest, Committee Hansard, 10 August 2012, p. 54.

[41] Mr Ian Corfield, Bankwest, Committee Hansard, 10 August 2012, p. 56.

[42] ADIs generally maintain a panel of approved valuation firms for conducting the independent external valuations they initiate. The CBA argued that the use of panel valuers reduces risk and leads to greater consistency in valuations. See Commonwealth Bank of Australia, Submission 81, p. 34.

[43] For examples, see Mr James Neale, Submission 54, p. 2; Name withheld, Submission 109, p. 4; Mr Geoff Shannon, Submission 118, p. 10.

[44] Commonwealth Bank of Australia, Submission 81, p. 34.

[45] RICS Oceania, Submission 121, p. 3.

[46] RICS Oceania, Submission 121, p. 4.

[47] RICS Oceania, Submission 121, p. 3.

[48] Although not a Bankwest customer, a useful example was provided by a customer of the CBA whose restaurant business suffered due to anti-social behaviour that took place immediately outside his premises. He argued that the strengths, weaknesses, opportunities and threats analysis contained in the initial valuation of the property 'made no reference to any social/law and order issues that would materially impact the capacity of the property to operate as a restaurant'. The borrower considers that the valuation over-estimated the property's value and 'provided a misleading basis for decision making regarding (a) the merits of purchasing at all, and (b) at the specific price that could be regarded as reasonable (c) that the CBA accepted as a basis for approval of the mortgage'. Mr Alan Harrison, Submission 9, pp. 2, 3. Mr and Mrs Gilbert and Sylvia De Michiel, customers of Bankwest, were also critical of the initial valuation undertaken of the motel property they purchased: see Submission 5.

[49] Mr D. Lindsay Johnston, Submission 105, p. 6.

[50] Mr Geoff Shannon, Committee Hansard, 10 August 2012, p. 22.

[51] Australian Property Institute, Australia and New Zealand valuation and property standards, January 2012, paragraph 4.21.

[52] Insolvency Practitioners Association of Australia, Submission 45, pp. 1–2.

[53] Derived from the agreement under which the receiver was appointed; the agency relationship with the company (or more rarely with the secured creditor); if the receiver is court-appointed, from being an officer of the court; and being an officer of the company. ASIC, Submission 97, p. 18.

[54] ASIC, Submission 97, p. 18.

[55] ASIC, Submission 97, pp. 18, 19 (footnotes omitted).

[56] Mr Trevor Eriksson, Submission 37, p. 3.

[57] Mr Trevor Eriksson, Submission 37, p. 12.

[58] Mr Sean Butler, Committee Hansard, 8 August 2012, p. 64.

[59] Ms Claudia Damato, Submission 36, p. 2.

[60] A controller includes a receiver or receiver and manager of the property (Corporations Act 2001, s. 9).

[61] RICS Oceania, Submission 121, p. 3.

[62] Insolvency Practitioners Association of Australia, Submission 45, p. 3.

[63] Mr Robert De Luca; Mr Ian Corfield, Bankwest, Committee Hansard, 10 August 2012, p. 61.

[64] Mr Trevor Eriksson, Submission 37, p. 12.

[65] Mr Trevor Eriksson, Submission 37, p. 12.

[66] Mr Peter Kell, Commissioner, ASIC, Committee Hansard, 8 August 2012, p. 59.

[67] Insolvency Practitioners Association of Australia, Submission 45, p. 3.

[68] Mr Robert Iannello and Ms Nicola Pagano, Submission 76, p. 3.

[69] Mr Robert De Luca, Bankwest, Committee Hansard, 10 August 2012, pp. 54–55.

[70] Bankwest, answer to question on notice, 10 August 2012 (received 7 September 2012), p. 2.

[71] Commonwealth Bank of Australia, answer to question on notice, 9 August 2012 (received 12 September 2012), p. 1.

[72] Treasury, Submission 120, p. 18.

[73] The provisions of the Australian Consumer Law related to financial services can be found in the Australian Securities and Investments Commission Act 2001.

[74] Australian Securities and Investments Commission Act 2001, ss. 12DA, 12DB.

[75] Unconscionable conduct is a concept found in common law and examined by Australian courts prior to the enactment of specific statutory unconscionable conduct provisions. In a decision of the High Court in 1983, Justice Mason observed that unconscionable conduct was 'an underlying general principle which may be invoked whenever one party by reason of some condition of circumstance is placed at a special disadvantage vis-à-vis another and unfair or unconscientious advantage is then taken of the opportunity thereby created. I qualify the word "disadvantage" by the adjective "special" in order to disavow any suggestion that the principle applies whenever there is some difference in the bargaining power of the parties and in order to emphasize that the disabling condition or circumstance is one which seriously affects the ability of the innocent party to make a judgment as to his own best interests, when the other party knows or ought to know of the existence of that condition or circumstance and of its effect on the innocent party': Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447, 462 (Mason J).

[76] Australian Securities and Investments Commission Act 2001, s. 12CB.

[77] Mr Peter Kell, Commissioner, ASIC, Committee Hansard, 8 August 2012, p. 58.

[78] The credit reforms were divided into two phases. Phase one largely consisted of the NCCP Act. Phase two has been divided into two further parts—part one consisting of various reforms such as obligations applying to consumer leases and the regulation of short-term lending, reverse mortgages and credit cards. Part two of phase two includes issues such as the need to regulate the provision of credit to small business or lending for investment purposes. See Australian Government, 'Phase two of the National Consumer Credit Reforms: consumer leases and enhancements to the National Credit Code', Regulation Impact Statement, June 2011, p. 5.

[79] Australian Government, Green Paper: National credit reform—enhancing confidence and fairness in Australia’s credit law, July 2010, p. 1.

[80] Treasury, Submission 120, p. 20.

[81] CPA Australia argues, among other things, that the policy would impact the supply of credit to small business and increase the cost of such credit, that no evidence has been presented that non-regulatory measures have been considered and that the proposal is an over-response to predatory lending. See CPA Australia, Submission 51, pp. 1–2.

[82] ASIC, 'Code of Banking Practice', www.asic.gov.au/asic/asic.nsf/byheadline/Code-of-Banking-Practice?openDocument (accessed 10 May 2012).

[83] FOS, Submission 50, p. 1.

[84] FOS, Submission 50, p. 2.

[85] FOS, Submission 50, p. 2; 2010–2011 Annual Review, p. 54.

[86] Mr Sean Butler, Submission 111, p. 4.

[87] Mr Trevor Eriksson, Submission 37, p. 6.

[88] Mr Trevor Eriksson, Submission 37, p. 13.

[89] Name withheld, Submission 115, p. 2 (emphasis omitted).

[90] Slater & Gordon, 'Bankwest – Commonwealth Bank of Australia Class Action', www.slatergordon.com.au/areas-of-practice/victoria/general-legal-services/class-actions/
bankwestcba (accessed 3 October 2012).

[91] Natalie Gerritsen, 'Bankwest class actions', Australian Financial Review, 11 April 2012, p. 11.

[92] FOS, Terms of Reference – 1 January 2010 (as amended 1 January 2012), paragraph 5.1(o). Prior to 1 January 2010, the value of the claim could not exceed $280,000.

[93] FOS, 'Dealing with customers in financial difficulty: small business', www.fos.org.au/centric/home_page/publications/the_circular/issue_2_april_2010/dealing_with_customers_in_financial_difficulty_small_business.jsp#Our_jurisdiction (accessed 4 July 2012).

[94] Mr Sean Butler, Committee Hansard, 8 August 2012, p. 65.

[95] Name withheld, Submission 44, p. 4.

[96] Mr Geoff Shannon, Committee Hansard, 10 August 2012, pp. 28, 29.

[97] Mr Geoff Shannon, Committee Hansard, 10 August 2012, pp. 28, 29.

Chapter 10 - Need for a root and branch inquiry

[1] Senate Economics References Committee, Competition within the Australian banking sector, May 2011, paragraph 3.91 [recommendation 1].

[2] Professor Kevin Davis, Australian Centre for Financial Studies, Committee Hansard, 8 August 2012, p. 35.

[3] Mr Jim Murphy, Executive Director, Markets Group, Treasury, Committee Hansard, 8 August 2012, p. 2.

[4] Mr Mark Degotardi, Head of Public Affairs, Abacus-Australian Mutuals, Committee Hansard, 9 August 2012, p. 12.

[5] Mr Bart Hellemans, Chief Risk Officer, ING Bank (Australia), Committee Hansard, 10 August 2012, pp. 33–34.

[6] Professor Kevin Davis, Committee Hansard, 8 August 2012, p. 37.

[7] Financial System Inquiry, Final Report, March 1997, p. 5.

[8] Mr Bart Hellemans, ING Bank (Australia), Committee Hansard, 10 August 2012, p. 33.

[9] Professor Kevin Davis, Committee Hansard, 8 August 2012, p. 35.

[10] Mr Phil Naylor, Chief Executive Officer, Mortgage and Finance Association of Australia, Committee Hansard, 8 August 2012, p. 30.

[11] Mr Mark Degotardi, Abacus-Australian Mutuals, Committee Hansard, 9 August 2012, p. 11. The Bank of Melbourne was acquired by Westpac in 1997. In 2004 the separate brand name was discontinued, however, in 2011 Westpac rebranded its Victorian St George branches (acquired by Westpac in 2008), naming them Bank of Melbourne.

[12] Professor Kevin Davis, Committee Hansard, 8 August 2012, p. 35.

[13] Professor Kevin Davis, Committee Hansard, 8 August 2012, p. 37.

[14] Mr Bruce Munro, Group Chief Risk Officer, National Australia Bank, Committee Hansard, 10 August 2012, p. 72.

[15] Mr Mark Degotardi, Abacus-Australian Mutuals, Committee Hansard, 9 August 2012, p. 11.

[16] Mr Phil Naylor, Mortgage and Finance Association of Australia, Committee Hansard, 8 August 2012, p. 34.

[17] Peter Martin, 'Call for rethink of RBA's role', Sydney Morning Herald, 6 August 2012, www.smh.com.au/business/call-for-rethink-of-rbas-role-20120805-23nuo.html (accessed 21 September 2012).

[18] Treasury, 2010 Treasury Incoming Government Brief: Labor, 'Overview', archive.treasury.gov.au/documents/1875/PDF/01_Overview.pdf (accessed 21 September 2012), p. 5 (emphasis omitted).

Minority Report by Labor Senators

[1] The Hon. Wayne Swan MP, Treasurer's economic note, no. 33, 2012 (9 September), p. 1.

[2] The Hon. Wayne Swan MP, 'Australia becomes world's 12th largest economy', Media release, 9 October 2012.

[3] See www.treasury.gov.au/ConsultationsandReviews/Submissions/2012/APRA.

[4] Reserve Bank of Australia, 'Statement by Glenn Stevens, Governor: Monetary Policy Decision', Media release, 2012-33, 6 November 2012.

[5] Glenn Stevens, Governor of the Reserve Bank of Australia, 'The Lucky Country', Address to the Anika Foundation Luncheon, Sydney, 24 July 2012 www.rba.gov.au/speeches/2012/sp-gov-240712.html (accessed 23 November 2012).

[6] Mr Jim Murphy, Executive Director, Markets Group, Treasury, Committee Hansard, 8 August 2012, p. 4.

[7] Mr Ian Beckett, Acting General Manager, Financial System Division, Treasury, Committee Hansard, 8 August 2012, p. 4.

[8] Mr Ian Beckett, Acting General Manager, Financial System Division, Treasury, Committee Hansard, 8 August 2012, pp. 4–5.

[9] Mr Mark Degotardi, Head of Public Affairs, Abacus-Australian Mutuals, Committee Hansard, 9 August 2012, p. 11.

[10] Mr Steven Münchenberg, Chief Executive Officer, Australian Bankers' Association, Committee Hansard, 8 August 2012, p. 17.

[11] Mr Jim Tate, Acting Chief Operating Officer, Australian Financial Services, Westpac Group, Committee Hansard, 9 August 2012, p. 7.

[12] Mr Steven Münchenberg, Chief Executive Officer, Australian Bankers' Association, Committee Hansard, 8 August 2012, p. 25.

[13] Mr Peter Kell, Commissioner, ASIC, Committee Hansard, 8 August 2012, p. 54.

[14] Treasury, Submission 120, p. 18.

[15] Mr Jim Murphy, Executive Director, Markets Group, Treasury, Committee Hansard, 8 August 2012, p. 8.

[16] As evidenced by parliamentary inquiries in recent years, such as the 2011 Parliamentary Joint Committee on Corporations and Financial Services inquiry into access for small and medium business to finance and the 2010 Senate Economics References Committee inquiry into the access of small business to finance.

[1] Mr Jim Neale, Committee Hansard, 10 August 2012, pp. 13–14.

[2] Mr Sean Butler, Committee Hansard, 8 August 2012, p. 61.

[3] Mr Sean Butler, Committee Hansard, 8 August 2012, p. 64.

[4] Mr Robert De Luca, Managing Director, Bankwest, Committee Hansard, 10 August 2012, p. 50.

[5] Mr Robert De Luca; Mr Ian Corfield, Committee Hansard, 10 August 2012, pp. 52-53.

[6] FSU, Submission 156, p. 6.

[7] FSU, Submission 156, p. 6.

[8] Mr Geoffrey Reiher, Committee Hansard, 10 August 2012, p.1

[9] Mr Geoffrey Reiher, Committee Hansard, 10 August 2012, p.1

[10] Mr Geoffrey Reiher, Committee Hansard, 10 August 2012, p. 2.

[11] Mr Geoffrey Reiher, Committee Hansard, 10 August 2012, p. 4.

[12] Mr Sean Butler, Submission 111, p. 2.

[13] Mr Robert De Luca; Mr Ian Corfield, Bankwest, Committee Hansard, 10 August 2012, p. 58.

[14] Ms Denise Brailey, Banking and Finance Consumers Support Association, Committee Hansard, 8 August 2012, pp. 44, 45.

[15] Mr Lucas Vogel, Submission 198, p. 13.

[16] Mr Robert De Luca; Mr Ian Corfield, Bankwest, Committee Hansard, 10 August 2012, pp. 54–55.

[17] Ashurst Australia, 'GST update for insolvency practitioners, GST Bulletin, August 2012, www.ashurst.com/page.aspx?id_content=8192 (accessed 28 November 2012), p. 1.