ANZ, one of the largest banks in Australia, announced today that they were going to have much higher amounts of defaults on adverse credit secured loans than previously thought. Many banks have been affected by the credit crunch and housing market crash and they are rushing to write down as much of their adverse credit secured loans as they can. This may be the only way that many of these banks will be able to stay in business according to many experts.”This is above and beyond what the market was looking for and it’s going to be worth about 3-4 percent downgrades to ANZ’s earnings,” said Chris Halls, a fund manager with Argo Investments.”The Australian banks are being prudent with regard to provisions,” said Martin North, consulting director with Fujitsu Australia and New Zealand. “If the economic conditions remain buoyant, corporate losses are not likely to be huge. Still, my expectation is that Australian banks may have to raise their provisions by between 10-15 percent from the current levels to take full account of the potential risks in the current economy.”The market will react to that with a huge amount of caution based on the experience that we have had,” said Paul Biddle, a portfolio manager with Souls Funds Management.
Related reading: Adverse Credit Secured Loan
Comment on this article