THE DISTILLERY: ANZ lure

One jotter sees a super solution to some of ANZ's funding cost woes, while another eyes BHP shale gas.

ANZ Bank boss Mike Smith declined to raise interest rates at the lender's first meeting since decoupling from the RBA, so for the moment he’ll have to find another way to ease increased funding pressure. The Australian’s John Durie takes a look at ANZ’s new low-cost superannuation product, designed to entice no-fuss investors to park their dollars at the Melbourne-based bank at a time when overseas funding is becoming more expensive. Meanwhile, a looming showdown between the retailers and regulators has been spotted by another commentator, and BHP’s latest numbers come up for discussion.

First, we start with The Australian's John Durie, who finds ANZ Bank trying to offset the pressure of lower margins with a new, simple superannuation product.

"ANZ's move comes after a flurry of covered bond and other issues from the Australian banks, which on some counts have covered about a third of this year's funding needs. Westpac and other local banks took up about $1.2 billion of CBA's $3.5 billion domestic issue yesterday. Under APRA's new prudential standards, the bonds will be treated as liquid assets. So it may be expensive money but it helps offset any liquidity concerns. The main concern remains Europe and fears of a major bank collapse. According to Reuters, French bank Natixis has shut its Sydney branch, which employed about 14 people. France's fourth-largest listed bank reportedly plans to sell its $1 billion loan book."

Secondly in this morning’s Distillery, The Australian Financial Review’s Chanticleer columnist Tony Boyd foresees a coming battle between regulators and retailers.

"Organic expansion plans by Coles and Woolworths in Australia’s richest retail geography will provide a test of tough new competition powers as well as measuring the regulatory burden on business from local government planning rules. It is clear from what is happening to proposed supermarket developments on Sydney’s wealthy north shore that expansion plans by Grant O’Brien at Woolies and Ian McLeod at Coles will be challenged as never before by the Australian Competition and Consumer Commission. Also, it is highly likely that developments planned by both companies will be stuck in bureaucratic local councils for longer than necessary and possibly result in crazy development conditions.”

The Age’s Barry Fitzgerald didn’t miss BHP Billiton’s warning to the market that its aluminium and nickel divisions could prove to be a problem with prices slumping. However, Fitzgerald also has his eye on BHP’s latest pet material – US shale gas.

"US gas prices have slumped to 10-year lows since BHP entered the industry, meaning that only its best shale gas plays will be generating the sorts of returns the market expects from BHP's investments. The company reports its profit for the December half-year on February 8. It will be the first time that the returns – or lack of them – from the shale gas push will be detailed. While not expected to impress, BHP is nevertheless expected to highlight that the new shale gas business was entered into with 50-year investment horizons and that there are good reasons to think gas prices will rebound.”

Staying with Fitzgerald for the rest of this morning’s business commentaries, in his Garimpeiro column the mining writer finds OZ Minerals boss Terry Burgess dismissing criticism that he’s taking too much time to purchase assets with his $750 million war chest. Speaking of minerals, The Australian’s Robin Bromby says the fourth quarter figures out of China were better than expected, but not as good as Australia might like when it comes to commodity prices.

Fairfax’s Ian McIlwraith has put his hand up to say Qantas doesn’t need a regional Asian partner for a joint-venture, premium airline. What it really needs is reform to the Qantas Sales Act so it can find a full-blown merger. The Herald Sun’s Terry McCrann says there’s no real solution to the current downturn in retail.

And finally, The Sydney Morning Herald’s Jessica Irvine strikes a similar note to her piece yesterday in this morning’s article that puts the World Bank’s dire warnings of another financial crisis into perspective.

Related Articles