Westpac gets ready to gouge Australia

Glenn Dyer writes:

GAIL KELLY, WESTPAC

With so many stories from Westpac this morning, you'd be mistaken for thinking there was some sort of campaign under way.

The Sydney Morning Herald had an "Exclusive" on page one in which CEO Gail Kelly was quoted as telling a meeting of big shareholders on Friday that the bank remained under pressure to lift rates because of the higher cost of money overseas.

That was also the story from the front page of The Australian Financial Review, where Westpac chairman, Ted Evans told the paper that Australia faced five years of interest rate rises because of the rising cost of money in international money markets (Yes, there does seem to be a story trend here.)

The SMH reported:

"In the private briefing the chief executive admitted that the bank's need for expensive overseas borrowings was expected to push its interest rate costs up by 30 to 40 basis points.

"But Mrs Kelly said more rises on mortgages would be difficult in an election year, according to people who attended the meeting in Sydney on Friday."

In The AFR Mr Evans, a former head of Federal Treasury, said Australians would have to get interested in rising interest rates for several years including rises outside those of the RBA.

Probably the most egregious remark in The AFR interview was Mr Evans' comments opposing moves to force Australian banks to hold more liquid assets to protect themselves in the event of another credit crisis.

He told The AFR that the RBA "is a natural standby and it's a very sensible thing to do. The RBA understands the issue without doubt, I'm sure APRA does too."

So Mr Evans a former senior public servant has now gone native and thinks like a banker.

That's the attitude, 'we take the profits and the taxpayer (through the RBA) comes along and provides the support when the going gets tough and takes any of the losses.'

The RBA should double the size of the 'haircuts' it imposes on the likes of Westpac in repurchase deals and other arrangements, just to get them used to paying penalty rates if we happen to have a future crisis. Bank shareholders and creditors should take losses before taxpayers.

But perhaps the best story that captures the inherent greed and cupidity of the bank was on the front page of the Sydney Daily Telegraph.

WESTPAC customers are about to be slugged interest on their interest.

The bank - which is already making about $18 million a day in profit - has written to hundreds of thousands of credit card holders that from June "interest will also apply to interest charges and fees on your credit-card account.

In applying the new charges, the nation's second-largest financial institution seems to have learnt nothing from a recent roasting it received for lifting rates well beyond the Reserve Bank.

"I think interest on interest is sneaky," Choice spokesman Christopher Zinn told the Tele.

But Westpac defended the move, saying it only had a tiny effect on balances.

A spokeswoman said that a customer with an average balance - about $3600 - would only pay an extra 67c a month in interest. Such a customer already paid about $72 a month in interest.

The move applies to all Westpac cards.

That's a far more important story to most Australians because it shows just to what lengths the bank is prepared to gouge its customers.

The Tele story makes a mockery the news from this group that Westpac has again been named in the Top 100 ethical companies around the globe. Perhaps the Ethisphere Institute didn't talk to the bank's Australian customers.