Commonwealth Bank of Australia (CBA) chairman David Turner has applauded Australia’s banking regulation during the Global Financial Crisis for helping elevate CBA to the top 15 banks in the world by market capitalisation.
Addressing investors at CBA’s Annual General Meeting today Mr Turner attributed some of the banks strong performance during the GFC to the sound regulatory environment and well managed economy during the period.
“Let me now move to regulation. It goes without saying that, while regulation is not everybody’s cup of tea, we should be grateful that the Australian banking sector has the benefit of a sound regulatory environment combined with a strong, well managed domestic economy” Mr Turner said.
While banks around the world collapsed, the Commonwealth Bank due to Australia’s strong regulatory environment was in a solid position to improve its global status said Mr Turner.
“We now rank in the top 15 banks in the world by market capitalisation, and there are only a handful of banks with an AA credit rating and above.”
Commonwealth Bank CEO Ralph Norris in his address to the CBA AGM continued to applaud the state of Australia’s banking system, but was quick to suggest additional regulation is uneccesary.
“At the core of this performance by banks has been a bedrock of sensible, prudent and well administered banking regulation.”
“Given that about half of the world’s AA rated listed banks reside in Australia, we have a challenge to avoid overregulation in this country as the result of the imprudence and mistakes of others. Mr Norris continued.
Basel III regulations to come out of the GFC aftermath are expected to place increased funding costs on CBA. While Mr Norris expects the capital holding proposals in Basel III to have limited impact on Australian banks due to existing banking regulations, Basel II liquidity proposals are expected to significantly impact on CBA’s funding costs, which will place pressure on the bank to increase interest rates out of step with the RBA.
