Banks turning the corner?

[Bill M]

A lot of hesitation today in the four major banks... CBA with some resistance around $46, NAB at $30, WBC at $24 and ANZ at $23... they also seem to show small candles (possible reversals down)... probably best to wait if resistance is crossed and then consolidated at that level... if they close down tomorrow, then I think a trip back to support will be the go

All up again, 3rd day in a row. My wife's already saying it's too expensive now, she wanted to buy SGB at $24 with her own money but they've bolted big time, ah well hindsight!

 

[ROE]

The last I read anywhere is that there "could" be as much as $5.5 Billion of sub prime exposure between the 5 big banks in Australia. Could you please supply a news story or link as to where you are getting this $100 Billion from? Thank You.

oops sorry didn't meant to ramp or scare mongering bank stocks just my view but here it is.

American subprime, not here, watch ABC lateline they interview a few commentators in the US a a month or 2 back. so far we know UBS and citi group write down easily 15B due to subprime..

Mr Bernanke himself
http://money.cnn.com/2007/07/19/news/economy/bernanke/index.htm

 

[Bill M]

oops sorry didn't meant to ramp or scare mongering bank stocks just my view but here it is.

American subprime, not here, watch ABC lateline they interview a few commentators in the US a a month or 2 back. so far we know UBS and citi group write down easily 15B due to subprime..

Mr Bernanke himself
http://money.cnn.com/2007/07/19/news/economy/bernanke/index.htm

Nothing to do with the Australian big 5 banks I'm afraid, thanks.

Edit: That story is almost 8 Months old too.

 

[Kauri]

they may be turning the corner... but are they doing it on two wheels or four???
Cheers
...........Kauri

 

[osmosis]

All up again, 3rd day in a row. My wife's already saying it's too expensive now, she wanted to buy SGB at $24 with her own money but they've bolted big time, ah well hindsight!

It looks like your wife can have a second dip at SGB after today's performance. I still think there's worse to come though.

 

[numbercruncher]

Dont read the following if you are easily scared

Bomb ticking for off-balance banks

A TICKING bomb for the banking sector is its off-balance sheet activities, which at last count stood at $12.9 trillion.

Australian banks have a big exposure to derivative markets. Their total shareholder value of $110 billion is dwarfed by the size of the banks' collective exposure to derivative markets of $12.9 trillion.

Put simply, the total derivative positions of the banks are 117 times as big as the banks' shareholder value. If even 1 per cent of these derivatives contracts default because third parties at the other end get into trouble, the whole shareholder wealth would be wiped out and our banks could be broke.

Given total bank assets are $2.1 trillion, it begs the question why Australia's banks have exposure to $12.9 trillion of derivatives positions. All banks hedge to reduce risk, but this is a big amount of hedging.

For example, Westpac has a face value of $1.4 trillion in derivatives at September 30, 2007, compared with an equity base of $16 billion, which is a multiple of almost 100 times.

The banks will argue they have outstanding risk management procedures and derivative arrangements have offsets so that only a net amount is at risk. Indeed, the Reserve Bank estimates that at September 30, 2007, the total credit risk and exposure of the banks to off-balance-sheet activity is $140 billion.

http://www.theaustralian.news.com.au/story/0,,23229288-7583,00.html

 

[numbercruncher]

And another possible problem for specific banks.

ST GEORGE Bank yesterday began to lift the lid on another time bomb ticking away in the Australian banking sector.

For the first time the Sydney-based regional revealed that its captive mortgage insurance business - a big contributor to bottomline profit in the last five years - had come under financial pressure.

While St George reaffirmed that it was on track to meet its earnings per share growth target of 10 per cent this year, the group conceded negative influences were building in some operations.

The bank warned investors that market volatility and increased funding costs were damaging the investment portfolios of its captive mortgage insurer, St George Insurance Australia, and the group's wealth management division.

St George is facing the prospect of having to mark down the carrying value of investments, a move that will have a direct impact on the interim result to be announced on May 6.

The emerging problems in the mortgage insurance arm may be bellwethers for other banks with insurance captives. These include Westpac, ANZ and Bendigo Bank.

http://www.news.com.au/business/story/0,23636,23256934-462,00.html

 

[Kauri]

they may be turning the corner... but are they doing it on two wheels or four???
Cheers
...........Kauri

and I hear that those two tyres have punctures and may be deflating,,, ahh, ye gods and little fishes, I'm glad I'm opposed to shorting..
Slainte
...........Karri

 

[dhukka]

Thanks for the links NC, sure the banks share prices have been hit hard and a lot has been discounted but we are only just getting started with the banks problems here in OZ. I just can't understand why people think now is a good time to invest in the banks.

 

[Bill M]

It looks like your wife can have a second dip at SGB after today's performance. I still think there's worse to come though.

Thanks mate, you're right it's back down to it's lows and it's not looking good. Now she wants em for $23.... I think she's smarter than me and she may just get them for $23! No doubt about it, it's a hard game, cheers.

 

[Bill M]

and I hear that those two tyres have punctures and may be deflating,,, ahh, ye gods and little fishes, I'm glad I'm opposed to shorting..
Slainte
...........Karri

Yeah I liked your comment earlier and it ran true! Keep up the good work and your sense of humour

 

[singlefished]

I just can't understand why people think now is a good time to invest in the banks.

You're right mate... Best bank deals going at the moment are savings accounts and term deposits - best I've seen so far is 8.05% (Rabobank 1 year term) and ING with 8.10% (1 year also I think...)

Another interest rate rise next week could see some of the big 4 up over the 8% mark and indeed, some of the smaller players could be closer to the 8.25% mark.

ratecity.com is a good place to check out the current rates, they seem to keep it quite up-to-date for home loans, savings accounts and a whole host of other goodies!

 

[ROE]

You're right mate... Best bank deals going at the moment are savings accounts and term deposits - best I've seen so far is 8.05% (Rabobank 1 year term) and ING with 8.10% (1 year also I think...)

Another interest rate rise next week could see some of the big 4 up over the 8% mark and indeed, some of the smaller players could be closer to the 8.25% mark.

ratecity.com is a good place to check out the current rates, they seem to keep it quite up-to-date for home loans, savings accounts and a whole host of other goodies!

Funny how you want to put your money in the bank if you think they are in trouble because your bank deposit is not guarantee basically it's not risk free .. if bank goes belly up you could lose your deposit.

want to be sure to be sure, government bonds is the only safe haven
and they don't offer any where near that rate cos it's risk FREE so for you to get above government bond rate you are taking on some risk

 

[numbercruncher]

I think the safest bank is probably CBA (largest deposit base), but if all went to hell, I wonder if the Gov would nationalise them like NR in the UK?

 

[Kauri]

Despite support from high yields, rate hike expectations and firm commodities, there are concerns over the sustainability of the AUD gains. Talk of a commodity bubble burst is growing. In addition, fears over a rising credit crunch in Australia is growing as Libor continues to edge relatively higher in comparison to other currencies. Wholesale credit pressures have seen St. George tap the international debt market last night, raising A$1.08 bln in short-term debt due March 2009.

Yeehaaa... this is a knife I wanna catch...
Cheers
......... Duke of Buckingham

 

[singlefished]

Yup... bit of an oxymoron!

You could always dig out and old shoe box and keep your ca$h under the bed... or an old oXo tin as my gran used to use

Not good to keep it under the bed however if you're currently residing in the flood prone regions of qld ) and also assuming you're not worried about depreciation!

Seriously though, banks (and subsequently bank shareholders) should benefit if over the next few months people actually start saving (instead of spending) and their deposit bases start to significantly build up from current levels?

 

[Kauri]

everywhere I look there is chatttter about a comode-itiy bubble and what happens if it bursts.. :fan lost me.. luckilyt..
meantime back in the tother world...
There has been news that the Ambac deal is in trouble and MBIA just put out a troubling headline - "MBIA says has no estimate of market losses as of Jan 31" - aahhh I feel better now.. :bonk:

Slainte..
............Slanted... :fish:

 

[dhukka]

everywhere I look there is chatttter about a comode-itiy bubble and what happens if it bursts.. :fan lost me.. luckilyt..
meantime back in the tother world...
There has been news that the Ambac deal is in trouble and MBIA just put out a troubling headline - "MBIA says has no estimate of market losses as of Jan 31" - aahhh I feel better now.. :bonk:

Slainte..
............Slanted... :fish:

And looks like MBIA has another lawsuit coming their way for lying their assses off in the previous financial reports

MBIA expects loss payments of $700m-$800M for 2008

Bond insurer MBIA Inc. (MBI) said it expects to make loss payments, before reinsurance, of $700 million to $800 million for 2008, mainly relating to insured credits in the residential mortgage-backed securities and home equity sectors.

In its annual report filed with the Securities and Exchange Commission, the Armonk, N.Y., financial services firm said it expects that its cash flow from operations in 2008 along with its current capital resources will be sufficient to meet its liquidity and operating cash requirements "in 2008 and the foreseeable future."

The company said it also expects surplus notes will require interest payments totaling $70 million in 2008.

MBIA said it expects additional material mark-to-market losses for January, due to widening credit-market spreads and rating action by two rating firms in late January and early February. The company said the mark-to-market position as of Jan. 31 isn't available at this time.

On Jan. 30, Standard & Poor's announced rating action on subprime residential mortgage-backed securities ratings and collateralized debt obligations ratings, and on Feb. 1, Fitch Ratings announced a rating action on the company's RMBS ratings.

However, S&P reaffirmed its AAA-rating for MBIA on Monday, after placing it on review for downgrade. A day later, Moody's Investors Service affirmed the company's AAA rating.

The company's mark-to-market loss from Sept. 30, 2007, to Dec. 31, 2007, amounted to $3.4 billion, or about $2.2 billion on an after-tax basis.

Elsewhere in its filing with the Securities and Exchange Commission, the company said it faces another putative shareholder class-action lawsuit alleging violations of the federal securities laws.

In January, a law firm disclosed that MBIA faces a purported class-action lawsuit for violating federal securities law from Jan. 30, 2007, through Jan. 9 of this year. The company is alleged to have issued false and misleading press releases, financial statements, filings with SEC and statements during investor conference calls regarding its expose to losses stemming from its insurance of residential mortgage-backed securities.

 

[Aussiejeff]

Banks turning the corner?

Given ...

(a) the miserable performance of the DOW last night (down 316 points) ...

(b) the miserable performance of the All Ords the previous day ...

(c) the miserable performance of the OZ banking sector in the two months since start of January (many SP's down 30%+)...

(d) the endless feed of BAD world financial data seemingly on an unstoppable? roll (eg: any US interest rate cuts are shrugged off within 24 hrs)...

(e) the prospect of a series of further rate rises here to poison the Oz share market ...

I'd personally tip the bank SP's might easily lose another 6-10% by the end of next week... with no end of down-side in sight.

Mebbe there is no driver currently at the wheels capable of turning these behemoths round the bend...



AJ

 

[gfresh]

A couple of years old (waiting on latest edition), however worth a read..

http://www.apra.gov.au/Insight/upload/Banks-2.pdf

Most specifically, what's off the banks balance sheets.. Yes, that's $5.8 trillion dollars.