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Are the banks ripping us off?


andrewe

Will the banks pass on the full RBA interest rate cut?  

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In reply to: Avenger on Saturday 20/09/08 02:15pm

I agree with you Avenger.

 

ANZ have made some appalling decisions (Opes + Tricom) - in fact - scandalous decisions.

 

I understand the regulators are leaning on ANZ VERY heavily and that is the only reason they have entered mediation on the Opes settlement.

 

BUt we all end up paying for ANZ's hubris - and that of its conceited staff involved in that debacle.

 

And the way things are going, investing in bank shares will not be the cash cow it has been of the last 15 years. I expect banking will become a lot cleaner and conservative when we come through the other side of this storm.

 

Coop

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In reply to: Mags on Saturday 20/09/08 03:07pm

Hi Mags

 

We could go around in circles with this.

 

I thought we were discussing inflation.

 

No one is going easy on creditors. You don't pay your mortgage the bank sells you out.

If the prperty does not cover your debt, you still have to pay the bank back. (unlike the USA, where they can just walk away)

Period! End of story!

 

Banks make bad decisions and to substain their profits they cry poor and expect the average Australian to substain their fat profits by charging higher interest and charges. You are damn right statics don't lie! In a period of low inflation, bank fees have increased by more than 300%. You are in business you don't see this? And always under the catch phrase of "don't regulate us we are not greedy fat piggies!"

 

And I love your outlook on life on the average Australian. Two houses, plasma TV, 4 weeks annual leave, sick leave etc.. VERY VERY costly to businesses is it not? But tell me my friend, if the average person did not have this, just who would be buying your goods or services? An African on an average $5 per month? But of course it is very easy to attack the "average" because statitists don't lie do they? But lets see now, how do you justify a chartered accountand charging $1,000 per HOUR?, How do you justify a lawyer charging $5,000 per hour? When the "average" gets $1,000 per week? How do you justify the banks CEOs' receiving millions in annual salaries and then expect the average Joe to pay for their mistakes? Now let me try and guess your answer "Supply and demand" right?

 

 

Regards

 

 

Avenger

 

 

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In reply to: Avenger on Sunday 21/09/08 08:50am

hi avenger

 

the bank fees have increased but i believe their margins have been eroded wrt the cost of borrowing. so there has been a shift away from relying solely on interest to generate revenues and it has moved to increasing fee income.

 

ask your local bank manager about his "mix" http://www.sharescene.com/html/emoticons/tongue.gif

 

top of the morning to you too.

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In reply to: wolverine on Sunday 21/09/08 09:19am

Hi Wolf

 

Good morning to you also. Glorious morning in Melbourne.

 

You are correct about margins. Australian banks had for ages the highest margins in the world, because they had no competition. With the advent of the Rams etc, they were forced to compete and hence their margins dropped. They more than made up for this in increased fees. Look at their earnings per shares. So who has paid for this? Yes the average Australian.

 

But what has happened in the last year or so? Their cost of capital has dropped by about 1.5%. This has gone straight to their margins. So, do we now assume that being the responsible social animals they are, they will bring their fees down? You hold your breath waiting mate, because I certainly won't.

 

As for talking to my "local bank manager", you always bring a smile to my face.

Once upon a time, I indeed had a local bank manager who knew my business and we worked as partners. I could actually ring my branch. When was the last time you tried to do that?

 

Regards

 

 

Avenger

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Credit from the financial institutions, in particular credit cards, is too easy to get. They are always wanting to increase credit limits, offer new cards with cheap honeymoon interest rate periods. It is all too temping and easy for people to get into large debt without seriously considering the consequences.

 

The problem use to be the other way round. Such as banks not lending to clearly credit worthy people just because they hadn't held a savings account with that particular bank for long enough (that was in the early 1980's).

 

Regarding credit cards, if getting one is too easy, try closing a credit card account. Everyone and their dog at the bank wants to talk to you about why you should keep the card going. They will waive that year's annual fees. They will offer you deals to consolidate debts. They might even reduce the interest rate on your current debt. It would be worth a try to say give me 7% instead of 19% for the life of the current debt.

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In reply to: Avenger on Sunday 21/09/08 10:02am

QUOTE
Once upon a time, I indeed had a local bank manager who knew my business and we worked as partners. I could actually ring my branch. When was the last time you tried to do that?

 

the other day actually, he asked me what stocks he should buy with $40k. http://www.sharescene.com/html/emoticons/lmaosmiley.gif

 

i still have a real bank manager. hard to believe but true.

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Banks' Net Interest Margin has been shrinking for the better part of a decade now. For ANZ, if I remember correctly, the weight adjusted net average interest receipts LESS net interest expenses is around 2.14%pa, down around 50% since the late 1980's. Competition for deposits is one influence - international players such as HSBC, BankWest (HBOS) are constantly offering higher interest compensation to depositers whilst enhancing the flexibility of products and facilities. 10 years ago, where could you find a linked account paying 7-8%pa with no minimum deposit, no account keeping fees and no limits on transfers? You don't even have to go back that far.

 

Financial deregulation was net positive for us consumers. It gave us the holy grail of cut throat competition to straighten out the party animals. Otherwise, we'd have to rely on the unwaviering kindness and philanthropic generosity of corporate social responsibility to help us out http://www.sharescene.com/html/emoticons/lmaosmiley.gif. So banks are becoming more customer focused these days because their survival hinges directly on our custom. My bank is the one where the creepy ATM dislodge from its wall socket and stalks you 24/7. A fortnight ago, I called them up regarding a dishonour fee charged to my savings account. I was still in the process of explaining the situation, not even getting to the point of raising my objection, when the chirpy voice on the other end issued a refund and thanked me for banking with them. Unbelievable. I decided to push my luck and called their credit division to complain about the interest charge. They gave me an exemption on annual account keeping fees. It was like Bizarro World.

 

The point is quite simple. Banks want deposits; banks need deposits, period. Deposits represent the lowest cost of funds funding source for banks relative to its other alternatives. Never has this fact being more prominent than the past couple of years where the credit crunch and liquidity freeze has increased the credit risk spreads pertaining to wholesale funds. That can be verified by the insane volatility in the global credit default swaps market. Remember term deposits? they're well and truly dead now. That's a definite drain on the stability of banks' working capital. Yep, customer relations are back in vogue because, quite simply, beggars can't be choosers. Of course, you can't have an online savings account as a stand alone facility - that's just the bait. The meat is in the requirement to link the intangible to an actual physical account; one with all the fee-incurring features.

 

Banks are increasing profitable, or at least no less profitable than prior to the credit crisis, because the bishop they sacrifice on the funding side is more than made up for by the queen on the financial services and intermediation side. Small and medium sized businesses lose out. Business loans and margin lending range anywhere from 300-500 basis points in excess of interest paid on deposits. Credit transactions through EFTPOS carry a 3.25-4.00% surcharge on amounts above $20 and even more for lesser amounts. Credit card interest substantially in excess of 20%. Residential mortgages come in combinations of two constitutional forms. Variable = death on demand. Fixed = death upon reset. Gen X/Yers with next to no equity rely on salary & wages to foot the bill. The chance to own your own home for first timers is increasingly becoming the chance to help your local friendly bank own your home, possessions and future income stream.

 

As far as I'm concerned, the lowest quartile income earners are better off debt free in the majority of circumstances. Leverage is only good for the wealthy as a form of tax mitigation.

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In reply to: jfgao on Sunday 21/09/08 11:53am

QUOTE
BankWest (HBOS) are constantly offering higher interest compensation to depositers

 

Hmmm - and last week they had to be sold to Lloyds - sounds like a flawed business model finally caught up with them.

 

QUOTE
Remember term deposits? they're well and truly dead now.

 

Which planet are you on? What is your source for this info - since March TD's have been the largest source of growth in the 4 majors liabilities.

 

 

Alot of what you say has merit but some of it is plucked out of the air I think.

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In reply to: slayer on Wednesday 24/09/08 07:11pm

Hi All

 

Did any body read the pleading from the fat little piggie at the ANZ bank in the age during the week regarding the rescue package in the USA?

 

Funny, fat little piggie does not want any regulation on banks. No sir, if we can't make money one way, we'll just raise fees - because we can! If we are incompetent and make bad decisions, why it is the fault of "greedy average Australians" who have the temerity to aspire in owining their own house!". So we'll just up fees again!

 

In the good old days of when we were a socialist country and "every body could afford to buy a house" (before the abomination of the Howard government with his massive redistribution of wealth from the average to the rich few) it was the unions who were the "greedy" ones pushing for unrealistic wages and conditions.

The mantle has now squarely passed from the unions to fat little piggies in banks and other public companies. There is a cancer in western society and it is called greed. Fat little piggies wanting more and more and don't give a S... on how this is achieved.

Tame shareholders approved one CEO's of a failed USA bank, $17,000 per hour. Read it again. $17,000 per hour! But of course his bank has now failed because of the average American defaulting, right? not his fault. So its only right that the average Joe pays for it.

and No, you can rescue us by taking the rubbish off my hands, but don't you dare look at my salary. Poulston actually said that he didn't want to look at salaries because he didn't want to affect companies incentives. At $17,000 per hour and he still needs incentives to work!

 

God dam it,now that all little fat piggies have joined my side as a socialist - and I was the only socialist left in the world- it behoves me to become the only capitalist left in the world!

 

So is anybody out there willing to pay this little piggie $10,000 per hour?

How about you Wolverine? Does your company need a new CEO. I'll even discount for you to $5,000 per hour. Or have you also turned into a socialist?

 

http://www.sharescene.com/html/emoticons/biggrin.gif

 

Regards

 

 

Avenger

 

PS go Hawks!

 

 

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