Australian Banks: A cause for concern?

[saiter]

It seems that Australian banks have been experiencing a number of computer glitches which have prevented consumers from accessing their funds:

• CBA
• Westpac
• NAB

I would be forgiving if these glitches were one-off and if they were localised to one bank; however, this is not the case. In fact, these glitches have:

• In the case of NAB, occured more than once
• Have affected other banks in Ireland, Finland, Japan and the USA (another USA article here)
• and have been occurring since mid 2010.

I've read some posts blaming these glitches on the outsourcing of IT work, but I find it hard to believe that outsourcing alone can be blamed for so many glitches across so many banks in so many countries.

The skeptic in me thinks that the banks are having issues with cash flow... Can anyone else shed some light on this?

PS: I found other articles showing that these glitches have occurred at least twice in CBA's computer systems in 2008 and in a UK bank in march 2007

 

[Glen48]

According to Money morning all the banks except ANZ put their hand out for money under TARP is 2008 some more than once but you won't find it unless you look in the USA TARP web site. CBA have the most to loose with a house price tank some thing like 300B but don't worry the good old taxpayer will prop them up so they can do what they like and take as must risk knowing the taxpayer is there to bail them out.
Just keep and eye on them for any sign of trouble take steps, big one in their direction with a withdrawl slip

 

[DB008]

Glen48; Yep, and this is why the AFR won't admit to their mistakes in reporting that the Aussie banks were in 100% fine financial shape during the GFC, because they will have egg on their face.

As you mentioned, all banks, besides the ANZ requested help, but didn't admit it during the GFC, gee....l wonder why...??

 

[skyQuake]

According to Money morning all the banks except ANZ put their hand out for money under TARP is 2008 some more than once but you won't find it unless you look in the USA TARP web site. CBA have the most to loose with a house price tank some thing like 300B but don't worry the good old taxpayer will prop them up so they can do what they like and take as must risk knowing the taxpayer is there to bail them out.
Just keep and eye on them for any sign of trouble take steps, big one in their direction with a withdrawl slip

Do you have a link to that article?
Also which US Tarp website are u referring to? Having trouble finding one that lets me search up banks that tapped it

 

[Julia]

According to Money morning all the banks except ANZ put their hand out for money under TARP is 2008 some more than once but you won't find it unless you look in the USA TARP web site. CBA have the most to loose with a house price tank some thing like 300B but don't worry the good old taxpayer will prop them up so they can do what they like and take as must risk knowing the taxpayer is there to bail them out.
Just keep and eye on them for any sign of trouble take steps, big one in their direction with a withdrawl slip

Oh dear, another misrepresentation of reality.
None of our banks received any taxpayer propping up during the GFC.
The government guarantee was simply offered as a means of shoring up investor nerves, not because the banks needed it.
But, if you are determined to believe our major banks are engaged in some sort of duplicitous behaviour, and equally you believe they are determined to take your funds with them in their calamitous collapse, then the government (read taxpayer) will indeed come to your rescue.

Meantime, I'd suggest a bit less hysteria in the wake of another computer glitch might be sensible.

If the NAB didn't have the funds, why would they open so many of their branches on a Saturday to ensure anyone who wanted funds could access these?
Certainly, it's a shameful inefficiency on the part of the NAB, but to interpret that as lack of funds is fanciful and pretty silly.

 

[Tyler Durden]

I'm just surprised that the last NAB glitch didn't have any impact on its SP...I was ready to strike

 

[startrader]

Oh dear, another misrepresentation of reality.
None of our banks received any taxpayer propping up during the GFC.
The government guarantee was simply offered as a means of shoring up investor nerves, not because the banks needed it.
But, if you are determined to believe our major banks are engaged in some sort of duplicitous behaviour, and equally you believe they are determined to take your funds with them in their calamitous collapse, then the government (read taxpayer) will indeed come to your rescue.

Meantime, I'd suggest a bit less hysteria in the wake of another computer glitch might be sensible.

If the NAB didn't have the funds, why would they open so many of their branches on a Saturday to ensure anyone who wanted funds could access these?
Certainly, it's a shameful inefficiency on the part of the NAB, but to interpret that as lack of funds is fanciful and pretty silly.

Are you SURE this is a misrepresentation of reality? I don't know if you are aware of what Glen48 is talking about here. It has nothing at all to do with the Australian Government Guarantee and nothing at all to do with the Australian taxpayer. It was actually US bailout money.

Glen is referring to the 5 billion US dollars accessed by Westpac and NAB from the US Federal Reserve which, if the banks were really as healthy as they said, they should never have needed to access.

At the same time the Reserve Bank of Australia borrowed 53 billion US dollars from the Federal Reserve.

These were emergency loans and without them Westpac and NAB would not have been able to meet their obligations to repay short term funding.

 

[DB008]

US Companies Bailout/TARP List

http://projects.propublica.org/tables/treasury-facilities-loans

http://projects.propublica.org/bailout/list


NAB and Westpac's Secret Bailout Revealed



I've got some more info coming about the Westpac/NAB loans.

 

[Glen48]

What we should be worried about if the banks need to be bailed out over the GFC in Australia with all out mineral wealth what's going to happen to them once house prices tank.
Why did some banks put their hand out a few times?
If all those banks in USA and the rest of the World are being bailed out by USA how bad is the world economy?

Thanks for your support DB80
Keep up the good work the more we can get info out in the open the easier it is to decide and find the truth and make out own choices.

 

[Smurf1976]

I would say the theory is plausible but not proven. Companies that can't meet underlying demand for their "product" but which wish to conceal this fact often have mysterious problems which just happen to result in customers being unable to access the product or service, such that the underlying shortage is hidden and blamed on the technical glitch.

Those living in some parts of Adelaide would be well aware of the transformers overheating, fuses blowing and so on every time there's a heatwave. Just as well too, since there wouldn't actually be enough power available if the distribution system failures didn't keep the load down.

Another one. Some years ago I became aware that there was no regular unleaded petrol whatsoever left in bulk storage in southern Tasmania. None, zero, zip. Now, obviously that's not a good situation and nobody wants to start a panic. Let's just say it was truly amazing how many service stations suddenly had "problems" with the "pumps breaking down" whilst at least one decided to tell customers that the electricity was off (I know for a fact that it was working fine). Anything but admit the truth that Hobart was almost completely out of fuel until the boat arrived that night.

Now, if electricity suppliers and petrol companies are using such tactics then I'd be very surprised indeed if the banks hadn't thought of doing the same thing in the event that they had a need to restrict withdrawals. Some will go into the branch that is true, and opening that makes everything look "normal", but I'd be pretty confident that the overall outcome would be a reduction in total withdrawals over the period compared to business as usual.

Note that I'm not saying that the major banks have necessarily had such a problem, just that the computers mysteriously "failing" is a plausible response to a need to restrict withdrawals and may indicate that this has actually occurred.

 

[saiter]

US Companies Bailout/TARP List

http://projects.propublica.org/tables/treasury-facilities-loans

http://projects.propublica.org/bailout/list


NAB and Westpac's Secret Bailout Revealed



I've got some more info coming about the Westpac/NAB loans.

Thanks for the info DB80, but all I could find was that the New York branch of NAB accepted $4.5 billion in loans (from the first link). There was nothing on CBA.

More information would be appreciated (if you have it).

 

[awg]

Do you have a link to that article?
Also which US Tarp website are u referring to? Having trouble finding one that lets me search up banks that tapped it

sorry cant help with a link, but i did read similar article, which seemed to be accurate and well researched.

Also read the banks counter that they were being offered such a low cost deal, so why not put there hand out, especially as alternative sources of credit were costly at that time

 

[enigmatic]

Isn't that the obvious likely reason.
Surely if you had debt which was at a much higher % then what the USA was offering would you not take advantage of there loan facility and reduce your much higher debt.
I know I would.
Or is keeping Higher interest Debt A wise thing..... Oh and its the same reason why JP Morgan would of grabbed Cheap free money and paid it back so quickly.. for that exact reason it was cheap quick money who wouldn't grab that to help improve growth.

 

[sinner]

Oh dear, another misrepresentation of reality.
None of our banks received any taxpayer propping up during the GFC.

Reality is that all the Australian banks would be done and dusted right now if it was not for "liquidity assistance" provided to them by the RBA using taxpayer dollars during 2008. The banks and you seem to be suffering collective amnesia regarding their receiving this assistance.

The government guarantee was simply offered as a means of shoring up investor nerves, not because the banks needed it.

If you can't survive a single night without rolling over short term debt on your own credit rating, then you up the creek without a paddle! It is delusional to say anything else occurred, the banks needed the guarantee and without it nobody would be willing to lend the likes of NAB or Commonwealth an overnight cent for under 5% (a number high enough to kill them overnight itself) or even loan them a cent at all!

Investors are not stupid, if the nerves were frayed there was good reason for that.

Certainly, it's a shameful inefficiency on the part of the NAB, but to interpret that as lack of funds is fanciful and pretty silly.

We'll see. Did you even hear about the bank runs in South Korea earlier this year? Let's tally the score on that one,

People who said "fanciful and silly": 0
People who didn't trust the bank and got their money out: 1

South Korea is hardly a 3rd world economy. If banks are failing there and they are, something is up.

 

[saiter]

Reality is that all the Australian banks would be done and dusted right now if it was not for "liquidity assistance" provided to them by the RBA using taxpayer dollars during 2008. The banks and you seem to be suffering collective amnesia regarding their receiving this assistance.

I haven't read anything about this assistance. What is your source?

 

[nulla nulla]

According to Money morning all the banks except ANZ put their hand out for money under TARP is 2008 some more than once but you won't find it unless you look in the USA TARP web site. CBA have the most to loose with a house price tank some thing like 300B but don't worry the good old taxpayer will prop them up so they can do what they like and take as must risk knowing the taxpayer is there to bail them out.
Just keep and eye on them for any sign of trouble take steps, big one in their direction with a withdrawl slip

Strewth I can't believe the illogical attack this brings on the Aussie banks.
The Aussie Government allows the Aussie Banks to Borrow funds from overseas at minimal interest rates and charges the banks a fee, commensurate with the amount they borrow using the govt AAA rating.

Talk about win win. The banks replace expensive funding with cheap finance from the U.S Fed; pay a nominal fee to the Aussie Govt for using the govt guarantee; and the profits continue to accumulate. Then to really top it off, they get to accrue provisions for doubtful debt against the income for the current fiscal year and minimise their tax.

Now of course, when the doubtful debt hasn't materialised, the banks have to reduce the provisions for doubtful debt and get to prop up the current round of profit reporting as the income from consumer spending on credit cards has dropped off a bit.

And the bonuses kept rolling in. Where did the tax payers incur costs?

 

[Julia]

Strewth I can't believe the illogical attack this brings on the Aussie banks.
The Aussie Government allows the Aussie Banks to Borrow funds from overseas at minimal interest rates and charges the banks a fee, commensurate with the amount they borrow using the govt AAA rating.

Talk about win win. The banks replace expensive funding with cheap finance from the U.S Fed; pay a nominal fee to the Aussie Govt for using the govt guarantee; and the profits continue to accumulate. Then to really top it off, they get to accrue provisions for doubtful debt against the income for the current fiscal year and minimise their tax.

That's as I have understood it also.

Do any of you who are espousing contrary views really believe any Australian with funds in any of the big banks are at risk of losing their money?

 

[sptrawler]

Well I just love my wifes take on this. She thinks it is just about restricting access to gain money on the short term money market. I think she is getting as cynical as me.

 

[bandicoot76]

this is by far the best explanation of the banking system & GFC i have EVER seen... be warned its an animated doco that goes for 30mins! happy viewing iloved it!


http://www.youtube.com/watch?v=tGk5ioEXlIM

 

[saiter]

That's as I have understood it also.

Do any of you who are espousing contrary views really believe any Australian with funds in any of the big banks are at risk of losing their money?

Yes.

These glitches have been appearing more frequently. If it were really a glitch, wouldn't they be able to fix it after the first time? Why is it that so many banking systems world wide are experiencing these glitches? Why haven't these glitches appeared in the past?

This, combined with the fact that Australian banks are IMO overly exposed to the housing market, makes me skeptical of our banks' current/future ability to meet their obligations.