Australia’s major banks have just booked a combined cash profit of $28.6 billion for the financial year ended June.
Yet Fairfax Media reports this morning that Westpac’s CEO Gail Kelly is warning that all Australians and the economy would have to carry the cost of making the financial system more stable.
'But before we accept Kelly’s premise that she and her other major bank CEO colleagues can cost-shift back to customers, the question that needs to be asked of Kelly and her fellow CEOs is simple.'
“How do you justify an ROE of 16.41% in the business of banking in a slow-growing economy where the tax payer is effectively back-stopping these returns because of your too-big-too-fail status and still tell Australians they will have to pay for stability?”
It is privatised profits and socialised losses.
Australia’s major banks are strong. They escaped the GFC largely because of government largesses, RBA rate cuts and China. Had the speed at which the miners cut jobs in 2008 leaked into the broader economy, Australia too might be mopping up the aftermath of a housing collapse.
To pretend that we were anything other than lucky and to tell Australians that we’ll all pay while a 16.4% ROE is seen as a right is simply wrong.
It’s time to call Australia’s senior bankers to account. The economy is not, and should not be, just about the banks.
More capital and leverage ratios are a must to protect the economy from the next GFC.
http://www.businessinsider.com.au/gail-kellys-breathtaking-overstep-shows-its-time-to-call-australia...
I wonder whether the banks will use some of that profit to pay back the "government's largesses" it enjoyed during the last GFC?
