The bank bill/OIS swap rate may seen arcane but if it stays at current elevated levels, it may increase rates for borrowers in the same way as an increase in cash rates by the Reserve Bank.
Tag Archives | bank liquidity
Following the recent cash rate cut, it seemed unusual for banks to then increase their term deposit rates, while only passing on a fraction of the cut to borrowers. What’s behind this change in bank strategy?
A recent change to banking regulation has significant implications for term deposits. With 31+ day break or notice clauses becoming more common, a large difference in deposit rates is expected.
The FSI’s final report is expected this month. From a bank capital perspective it could go one of a few ways: changes to mortgage risk-weightings, new capital rules for the big banks, a combination of both, or no change at all.
Whether you borrow or deposit or pay fees, a general understanding of how bank pricing committees determine the rates and charges for their products could provide the negotiating edge you need to get a better deal.
Anyone responsible for product design and pricing in the superannuation industry needs an understanding of the revised Australian Prudential Standards on bank liquidity. Some creative solutions may be needed.
APRA has given a clearer definition of the term ‘financial institution’, and it may be broad enough to catch a wide range of client-authorised activity, including Separately Managed Accounts.
In Cuffelinks on 2 April 2013, we posted an article on bank liquidity. Alun Stevens, Principal at Rice Warner Actuaries, took issue with some of the conclusions, and a lively debate followed. Warning: very long and technical.
The nation’s savings are in superannuation and the nation’s funding needs are in the banks. Yet the regulators and the new liquidity rules make it even more difficult for the two to get together, with another free kick to SMSFs.