This is an edited and abridged transcript of a discussion between Commonwealth Bank CEO Matt Comyn and AFR Chanticleer columnist James Thomson.
The past weeks have seen the failure of Silicon Valley Bank, the forced merger of Credit Suisse and UBS, and tremors in the mid-size US banking sector. Chanticleer columnist James Thomson and Commonwealth Bank CEO Matt Comyn discuss what it could all mean for Australian banks. This is an edited and abridged transcript of that discussion:: 20 days ago the world seemed a very different place.
We’d say the Australian banks – we are the most well-capitalised large bank in the world. I think the four Aussie majors would be four of the top five. We’re holding pre-GFC or relative to GFC, 2½ times more capital, even after we scale the balance sheet for growth over that time.We’ve got the lowest proportion of short-term wholesale funding, which is ... obviously, less valuable. So, that’s 7 per cent. It used to be 25 per cent pre-GFC.
But if you think about the funding task, and one of the benefits of being conservative and ahead of our funding task, we’ve got $35 billion of issuance to June 30. We’ve already completed $31 billion ... so we’re in an extremely strong position. Why does that matter? Because in times of volatility, like we’re seeing at the moment, you’re seeing funding spreads wider ...
One area that’s certainly garnered some attention in the last few weeks has been commercial property in the US. What’s the flow-through of that? You know, regional banks have a much higher proportion ... I think it’s estimated around 70 per cent of loans to commercial property in the US come from regional banks. How does that sort of play through over time?
Then there are other industries which are perhaps more challenged – aged care is one. Obviously, we’re continuing to watch closely commercial property. The housing market has probably been more robust, certainly from an asset valuation. Nothing’s really changed in the last few weeks.
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