THE DISTILLERY: ANZ angst

Banks, banks and more banks, interest rates, exit fees, honeymoons, holidays, fixed rates. You name it, the patter and chatter of the jotters this morning is on the ANZ's multi-pronged move to lift rates yesterday which verged from the juvenile in some papers to smart, tough analysis in others. The politicians and their hand maidens in ignorance, the press gallery, still don't understand the issue. It has always been much wider than just mortgage holders. Perhaps they should read some of their own columnists to find out, especially in The Sydney Morning Herald and The Australian. There are several good educational efforts in both papers.

We've heard this one before. The Sydney Morning Herald reports: "The government is promising new legislation to give shareholders power to rein in executive salaries and is talking up its banking reform package as it is forced to again castigate one of the big four for ignoring pleas not to raise mortgage rates by more than the official rate rise. The Prime Minster last night blasted the ANZ, saying it deserved the same condemnation for raising its variable mortgage rate by 39 percentage points as was directed at the Commonwealth Bank last week." And this effort from The Australian: "ANZ has sparked a political firestorm by defying the Gillard government with a 39-basis-point rise in its variable mortgage rate." Yes, so hot was the firestorm that the tabloid stablemate, The Daily Telegraph in Sydney all but ignored the move.

The Australian Financial Review's Chanticleer columnist wrote this morning: "The backers of the populist war against the banks achieved two small victories yesterday when the Australian Securities and Investments Commission released a narrow set of criteria for charging mortgage exit fees and ANZ Banking Group abolished them altogether." And The Australian's Matthew Stevens wrote: "Having waited an almost decent time to allow an angry world to digest the Reserve Bank's unexpected hike in the official cash rate and the Commonwealth Bank's overweight reaction to that shift, the ANZ boss yesterday finally ticked off on a response that's as neatly commercial as it is politically disarming. In the end, ANZ went harder than the RBA but not as hard as CBA and it has attempted to defuse Canberra's overwrought assault on the banking sector by raising the white flag on exit fees."

News Ltd's Terry McCrann says: "It's taken eight days in November, but the ANZ has become the first of the 'other guys' to bow to two realities. The most obvious might seem to be its decision to 'off' exit fees – coincidentally(?) on the same day that the corporate cop ASIC unveiled its new rules for these fees. ASIC actually used the words "guidance" and "expectations of lender practices". But in the time-honoured way, these are 'expectations' that a financial institution would find impossible not to be 'guided' to fulfil. Exit fees don't impact most borrowers, because most borrowers don't incur them by paying their loans back in the 3-5 year (early) time frame in which they generally apply."

While others on his own paper were writing "political firestorm" to describe the ANZ's move, The Australian's John Durie joined Ross Gittins of Fairfax (see below) in taking a different look at the issue: "The big unknown political question is when Canberra will champion the cause of the bank deposit holders. They number three times as many as mortgage holders and, while they're not battlers spending 40 per cent of their pay trying to buy a home, they represent a big chunk of the electorate. Joe Hockey would be an ideal candidate to champion this cause, given just 32 per cent of his electorate are mortgagees against the national average of 41 per cent." It's too obvious for Mr Hockey. And Michael Stutchbury on The Australian also mounted this issue in a similar vein: "The furore over rising interest rates shows how much our political debate is driven by mortgage debtors. They're being squeezed as the Reserve Bank lifts official interest rates. And squeezed again as the Commonwealth Bank and now ANZ lead the other big banks in raising mortgage interest rates higher still. Yet the mortgage debtors' pain is the savers' gain. Those saving for the future – or retirees living off their nest eggs – are benefiting both from the Reserve Bank's shift to "restrictive" monetary policy and the intensified bank competition for deposits. Even after the global financial crisis, there's plenty of competition in banking. It's just shifted in favour of savers and against borrowers."

These commentaries appeared a day after the best commentary on the whole banking shemozzle from SMH economics editor, Ross Gittins: "Forgive me if I'm less than impressed by the tirade of righteous indignation being unleashed against the banks. It's self-serving, selective and uninformed. I guess when you get angry you forget to check things out and think them through. The media and the politicians on both sides are whipping up indignation, rather than conveying information and fostering understanding. The trouble with all the media and political fuss about rates is it reinforces the impression ''competition'' is something the banks – or the government – should deliver to us on a plate. Sorry, whingeing lazybones, markets don't work like that. Those who say competition between the banks is inadequate are right. But they should be looking in the mirror as they say it. Another unwarranted assumption by the indignation merchants is that all of us are borrowers from the banks and none of us are lenders to the banks. Nonsense. Many people – including those in or approaching retirement, those who rent and those saving for a home deposit – have savings deposited with banks. And those people have benefited from the same process people with home loans have been complaining about." All this is far too hard for many journalists and editors to grasp, let alone politicians, such as The Greens, Wayne Swan, Julia Gillard and Joe Hockey, who should really know better.

On other issues, Michael Pascoe wrote at SMH.com yesterday: "Much of the commentary on our currency's rise concentrates on our interest rates and China's demand for commodities. The self-reinforcing patter among the gold bugs is largely about a mysterious innate value in yellow metal. Vast forests are felled to propagate similar self-centred thoughts across the full range of commodities. Well, maybe not such vast forests these days, but squillions of electrons zip around the internet with the verbiage anyway. And most of the commentary myopically overlooks the biggest driver of the headline-inducing price spikes: the decline of the world's major currencies pushing up everything else."

Fairfax's Elizabeth Knight wrote this morning: "If Wayne Swan and his Treasury team understand their maths, Australia's iron ore and coal companies face lower than expected earnings in 2012 and 2013 thanks to the appreciation of the dollar. We know this because this week Swan downgraded the expected tax receipts from the new profit-based mining tax (MRRT) by more than $3 billion, or 30 per cent. He is right that as the coal and iron ore contracts are negotiated in US dollars, the appreciation of the local currency will affect profits. But the Treasurer ignores the fact that the improvement in the price of these commodities will more than offset the earnings damage from the currency movement." And on the ANZ move she wrote: "The chief executive of CBA, Ralph Norris, should not feel relieved that he gets to share the pain of public and political resentment with ANZ's Mike Smith. The move by ANZ will only reignite the debate surrounding the banking industry's preference for profit over customers. CBA does not receive immunity because it has been belted for the past week. Old wounds will be reopened each time another of the big four moves on rates."

The AFR reported this morning that "The competition regulator is investigating whether the proposed takeover of the ASX by its Singapore counterpart will block other stock exchange operators from entering the market, placing another major hurdle in front of the deal." And in the same area, the paper said this morning that "Grocery wholesaler Metcash and South African retailer Pick n Pay are embroiled in last-minute negotiations with the Australian Competition and Consumer Commission over the fate of 85 Franklins supermarkets."

John Durie wrote in The Australian yesterday: "Warrnambool Cheese & Butter Factory shareholders have questions to ask chairman Frank Davis, given he is diluting their holding. Davis is issuing 13.3 million shares at between $2.50 and $2.90 a share just months after rejecting a $4.50 a share bid from Murray Goulbourn (sic). On the face of it, the Warrnambool Cheese & Butter Factory board is digging itself into a deeper hole through the $37 million capital raising, including the placement to Bega Cheese, which acts as a potential blocking stake to MG's 10 per cent stake in WCB." And this morning, Fairfax's Insider, David Symons writes: "The most remarkable aspect of Warrnambool Cheese and Butter's $37 million capital raising is the flood of institutional interest in the diary business. This is quite a reversal after the last institutions left the Warrnambool register earlier this year, selling out to an aggressive Murray Goulburn Co-op. The selldown was accompanied by disillusionment over Warrnambool's preparedness to prioritise dairy farmer suppliers over external shareholders."

The AFR also reported that "QR National chairman John Prescott has dismissed speculation the railroad group's $6 billion initial public offering could be repriced, claiming it will be floated within the forecast range of $2.50 to $3 a share." Remember the QR issue? The retail component closes tomorrow, train's leaving the station.

The silliest statement of the year award goes to the American running the World Bank, Robert Zoellick, who this week suggested gold could play a part in setting currency values. Fairfax's Ian Verrender, on the reaction: "This week the president of the World Bank, Robert Zoellick, uttered the unmentionable, at least for a man in his position. On Tuesday, he leapt from the economic closet and pronounced in the Financial Times that the world needed a new global currency setting system, one that harked back to a bygone era, one that included gold as an international benchmark. By yesterday, after igniting furious international debate including being called 'the stupidest man alive', he was on the back foot, declaring that he was not advocating a return to the pre-1971 gold standard, the so-called Bretton Woods agreement."

And Stephen Bartholomeusz wrote in Business Spectator on a significant change in global bank regulation: "There are, however, signs that the consensus among regulators about what the regime should look like is not as strong as it has appeared. A comprehensive and globally harmonised set of much tougher rules for capital adequacy and liquidity won't guarantee that a big bank won't fail. Industry levy arrangements (like the one in place for Australian bank deposits) or even formal deposit insurance schemes won't guarantee that taxpayers might not be asked to help bail out a systemically important institution in the future. They will, however, reduce the risk and cost of a failure and those risks and costs need to be assessed against the risks and costs associated with winding back or disrupting decades of globalisation of trade and financial flows by handicapping the institutions that represent the most transparent and regulated conduits for those flows."