APRA to keep banking crackdown secret

According to the ABC, Kevin Nixon, Former Managing Director of Regulatory Affairs at the Institute of International Finance (IIF) says foreigners are puzzled about the entire Australian housing market. Now a partner (risk) with Deloitte in Sydney, Nixon is a respected voice globally on regulation and governance of the financial system.

In a Deloitte round-table on the Australian mortgage industry, he remarked about his experience at a meeting of central bankers, “One of the central bankers present asked: ‘What’s going on in Australia?’ to which the research economist replied: ‘We’ve given up thinking about Australia. There is no economic rationale for it”

But while research economists and central bankers around the world can simply give up trying to understand the psyche of the irrational Australian property investor, the challenge mounts for local regulators trying to make “behavioural adjustments” to keep the market from that fateful correction and limit irreparable damage to our banking system.

On Friday in a House of Representatives Standing Committee on Economics, the Chairman of the Australian Prudential Regulation Authority, Mr Wayne Byres said the regulator was unlikely to ever disclose what capital controls it will impose on individual banks who do not exercise prudence.

Last year, the watchdog wrote to banks indicating it would not like to see loan growth to risk taking property investors exceed 10 per cent. Earlier this month, it was revealed the limit was breached by three of our major banks. (‘Investor loan growth limit breached by three major banks‘)

Macquarie Bank lead the pack with investor loan growth up an astronomical 73.1 per cent over the year.

Investor loan growth for the NAB grew at 13 per cent, followed by Westpac 10.4 per cent, ANZ 10.3 per cent and the Commonwealth Bank at 9.2 per cent.

The Australian Prudential Regulation Authority has the authority under the banking act to apply different prudential capital ratios to authorised deposit taking institutions (ADIs). It is widely believed the regulator will increase the ratios of banks it believes is imposing greater risk to the Australian banking system, requiring the bank to hold more loss-absorbing capital and as a side effect, reduce profitability. However, these ratios will remain confidential.

Mr Byres told the house economics committee:

Prudential regulators are traditionally the people who try to operate behind the scenes—below the surface, below the radar. Financial institutions survive and thrive because they have confidence and the community has confidence in them, and you are happy to put your money into the bank, you are happy to take out your insurance policy and you are happy to invest your superannuation money because you have confidence that, when the time comes, you will get your deposit back, your policy will be paid and your super money will be there.

Unfortunately no institution is perfect, and sometimes issues arise. Prudential regulators tend to try to operate behind the scenes to get issues fixed and to avoid them becoming a source of concern to the community. If we can do that well and head off problems before they become serious problems, that is actually reinforcing of financial stability, because it is preserving the confidence that exists in the system.

But it could be too late for the regulator still scared from the collapse of Australia’s second largest insurer, HIH.

Barclay’s warned last week, Australian households are the most indebted in the world.

Today, head of fixed income for BT Investment Management Vimal Gor echoed the same concerns saying homeowners in Sydney and Melbourne have so much debt that any drop in house prices would be a disaster. (‘Drop in house prices would be a disaster: analyst‘)

The Reserve Bank of Australia was unable to drop interest rates last month due to the housing bubble entering hyperdrive in both Sydney and Melbourne. With APRA’s crackdown remaining top secret and with the Reserve Bank as chair of the Council of Financial Regulators, the next cut in the official cash rate could signal APRA has confidently put these much needed controls in place. Until then, it would be imprudent for the central bank to cut.

» RBA says too early to judge APRA’s home loan restrictions – The ABC, 25th March 2015.
» Banking regulator APRA says individual banks targeted in crackdown on investor loans – The ABC, 21st March 2015.
» APRA keeps macroprudential strictures on bank lending secret – The Sydney Morning Herald, 20th March 2015.
» RBA sounds alarm about bursting of housing bubble inflated by cheap credit – The Sydney Morning Herald, 25th March 2015.
» Hot property: lenders push back on rate cuts – The Australian, 26th March 2015.
» Investor loan growth limit breached by three major banks – The ABC, 10th March 2015.
» Numbers add up for constraints on bank loans for residential property investors – Australian Financial Review, 15th March 2015.


  1. Does not matter what controls are put in place as the horse has already bolted. Australia will experience a collapse in asset values as China goes off the boil. Can’t be avoided.

  2. “the regulator was unlikely to ever disclose what capital controls it will impose on individual banks who do not exercise prudence”- Corruption, and Greeeed.

  3. LOL, when central bankers have given up isn’t it time the average Joe did too?

    Oh, hang on, with first home buyers at record low levels, I think they already have.

    There has never been a better time to sell.

  4. There is no rationale because the greed of the banks has no boundaries. The big 4 operate in a risk free environment where the taxpayers will pick up all losses. They have turned our economy into a casino where they can never lose. Every time I go to the bank a teller offers me a $50,000 loan unsecured. You can feel the pressure to increase their debt portfolios in all their media advertising and brochures. This is a clear case of financial terrorism where they are prepared to wreck our living standards for their monetary gain. Currently they are too big to jail but this will change as people lose their homes and pensions only to find out it was caused by the fraud and corruption at all levels of the finance industry.

  5. @Nexus789, you are probably right but it seems the Australian government in collaboration with their bankster masters will do everything possible to inflate this bubble. When, and if the property bubble bursts, and to what extent is anyone’s guess.

  6. Nexus789 is right. The Terms of Trade dont lie. We import more than we export , household debt level amongst the worst in the world, its all going pear shaped soon. The writing is on the wall.

  7. @4. Max D. Leverage, to continue on that line, Australians are kidded and kidding themselves into believing that Government debt is still on the small side here. OK, Commonwealth Gov. debt may be around the $275 Billion. Add State and Local Council debt, the total Government debt hits around $650 Billion (I think a bee’s leg more). That’s significant. Now coming back to extending the line further from your post, how much Government debt have other countries incured, like monsterous amounts of, were due to those Governments bailing out their banks and other financial institutions? The risks free ones you’ve pointed out that is? We all know who they are.

    Boy! Australians are really in for it. Now add private debt to that, can anyone pronounce that huge number I think I can imagine?

  8. Although the cash rate is pathetic it’s still a great time to keep cash…..don’t let them guide you into these investment vehicles especially real estate…..I’m more than happy to wait.

  9. Bring it on-Let the Banks go bankrupt-our savings are guaranteed by the government anyway. Let the investor lose his assets-they got them by us the taxpayers subsidizing his efforts so they can become rich-let unemployment skyrocket as it is based on the accumulation of debt by industry and consumers which is only good for those lending us money we do not have-I WANT A MASSIVE ECONOMIC CORRECTION-NOW!!!

  10. David Lindsay author “Australia:Boom to Bust and Print:The Central Bankers Bubble”.

  11. @ Theo

    Be careful what you wish for. In an all out massive correction it is always the 99% who will suffer the most. The really rich have already diversified their assets and are cashed up waiting to pick up real assets at cents on the dollar.
    Anyway the banks will be saved by the taxpayers and if things get really tight the Government will impose monetary controls and it could take many years before your Government guaranteed funds are released.

  12. Lindsay David “Not long ago,a good friend from L.A. popped into Sydney for a visit and we drove around the city and had a look at the few properties for sale.We were standing at the front of a very modest 3 bedroom home,when he pulled out his phone calculator to try to make sense of the math.I’ll never forget his absolute bewilderment.He shook his head and muttered,”Dude,this is a bubble like I’ve never seen before.I just bought a 3 bedroom home in Beverly Hills for the same price as this piece of sh#t.”

  13. @Morpheus-You are right. The people who voted for the Labor/liberal party monopoly for decades, despite having proven themselves as corrupt and incompetent. are responsible. They will reap the rewards of their own actions. The other 1% you mention are those who never voted for this Labor/liberal party monopoly but instead chose either to vote for another party or instead of voting they would place a list of their complaints into the ballot box instead. This 1% is the one I will feel sympathy for. Maybe the coming impending economic correction will instil voters a sense of responsibility and duty to the country’s economic and social welfare instead of their personal pockets? but then again I doubt it. Look at the USA and what they went through and yet many people still vote for their corrupt Democrat/Republican party monopoly. People will never really wake up. Its “The Matrix” over and over again Morpheus.

  14. @11, THEO,

    Bring it on-Let the Banks go bankrupt-our savings are
    guaranteed by the government anyway.

    The Government guarantees $20 Billion per bank, totalling around $360 Billion all up. The big 4 have much more than that loaned out, and borrowed more than that themselves. I’m sure the Government will up the bail out package, which brings me back to my response, No. 9.

    Also if the bog mountain hits the propeller blades (were way beyong sh[CENSORED]t hitting hte fan), I think covered bond holders get first pick at what ever offerings are left in the bank.

  15. Plex….keep in mind …deposits under the fdic only insure 35 billion….the current savings world wide is approximately 10 trillion….so only a small amount is insured. Also a lot of Western countries including Canada and Australia have accepted bail ins if banks go under as what happened with Cyprus. Cyprus was a trial for the bigger event. Unfortunately savers are regardered as creditors within the bank and these savings are regarded as non secured. The insured money is minimal. These so called bail in agreements have been in the making since 2010…. There is always fine print in today’s day and age….horrible times we live in..all the best.

  16. @11-The government once guaranteed deposits up to $1 Million but now it is down to $250,000. The government had the resources for such guarantees to begin with. Let the banks go bankrupt-seize their assets and sell off their portfolios to regain their losses. But then again it was the Federal government. with the blessings of the voter, that allowed Banks to get themselves into this mess. IF the government is committed to show the financial world it will not tolerate corrupt and bad lending practices, by letting them go under, the institutions will be much more responsible. I doubt this will happen because politicians campaign funds are paid by Banking and the Real Estate institutions. These minority groups are becoming rich at the expense of all taxpayers by generous tax concessions that will never be changed, while the government will direct the public’s growing frustration with a worsening economic climate by public relations stunts like bashing welfare and dole cheats, as the root of all evil.

  17. Today we voted with pens.First time.We also voted on the internet,also for the very first time.New South Wales.The new order.Promotions for the connected only.

  18. There is no economic rationale for it

    Property prices only ever go up, … property prices double every 7-10 years, … interest rates won’t be going up in the foreseeable future, … you had better buy now before you’re permanently priced out, … prices have fallen so now is a great time to buy, … prices are rising so now is a great time to buy.

    These are just a few of the ways that the RE spivs reassure the Australian punters that their “all in” bets on property are sound.

  19. Just incase interest rates on term deposits weren’t small enough, thanks for the artcle @19 Arthur Ponzirelli. That should bring savings into the negative. When people, the very few, that do have savings either run out, or hide it in a hole. What next? When those still working to some capacity are taxed too much and can’t go any further, what next? When (the think they’re) home owners find it harder and harder to chip their mortgages down, find they’re really going nowhere, what next?

    When the consumer is tapped out and their utility bills, insurances, and food (the essentials) keep rising in price, and computers, fridges, cars, stoves, platic junk keeps falling in price (the so what items) that no-one really needs to buy anyway fall in price, what next?

    When governments are maxed out and cut down on spending, cause they owe their financiers money, what next?

    When super has been sucked out, what next?

    We’re all broke, that’s whats next. (Think they’re) Home owners, savers with nothing left, no super, credit cards close to the limit,…

    Seems like a perfect circle of wealth destruction with a winner or few at the completion of the circle. Its’ almost seems (I don’t dare call it a conspiracy), there are a few hidden hands planning and lobbying all these processes.

    All to feed this Property Industrial Complex. By the day, this is snow-balling into it being obvious. Even the house-horny should be able to see this by now.

    Many people are fast approaching the, you’re f[CENSORED]ked territory.

    This is actually quite scary.

  20. @ Arthur Ponzirelli

    The answer is for the Government to take the deposit guarantee away from the big 4 and their subs and offer it to smaller Australian banks only. It would then control the gambling habits of the banking organised crime syndicates by creating a deluge of funds into community banks. By the way they are not Australian banks and are controlled by the usual cartel of HSBC (money laundering) JP Morgan (fixing markets) Citicorp (surviving on corporate welfare) & National Nominees (cross investments by big 4 in each other) Sort of like the 4 musketeers “One for all and all for one”. So why guarantee foreign controlled institutions who financially rape and pillage the country’s economy?

  21. The message is clear – bank deposits are seriously encouraged to be diverted into property. This property bubble must be upheld and everyone has to take their part in maintaining and growing it.

  22. So having a substantial amount of cash in the bank, how do I best preserve it. Scary to think I could get a severe punishment for being prudent (if a bail in occured etc).

    Which ADI’s have under $30 billion in deposits, and which of those are the least exposed to Australian housing. Ie, which are the safest ADI’s to spread my exposure.

    I am thinking about taking cash out and holding it in a vault somewhere, although I think there is only one place in Perth that does that.

  23. @27. NL, consider vacuum sealed packs. Then storing in a backyard hole, fake wall, under a floor layer, removeable bathroom tiles, in the washing machine (not the actual wash basin), under the carpet that is under a heavy table (that is, a part of the floor that isn’t walked on), a safe, fake ceiling, etc. If finances enable you too, rent a small appartment in a decent suburb, and use some of the above techniques there too.

    Yes I know it is a lot of money. I’m seriously thinking of how to take money out of the system.

    Bit extreme, and maybe even immature, but I feel as though I need to fiercely protect what is mine.

    Don’t trust vaults. You’re not the only one with the key. Make sure you don’t end up burning your house down too.

  24. Well you know there really isn’t much anyone can do in the end; because

    a)Even if you convert your fiat money to gold or silver, there will be a recall of that as there was in 1933; If you try and use it anywhere there will be an ample number of neighbours that will dob you in no problem! As a people we are now Spiritually bankrupt and most people are not even aware of what Socialism is for instance (which has been here since 1936).

    b) As a consequence of the combined problems the world over, the entire economic system will collapse anyway so any fiat you have stashed anywhere will end up making the American Continental or Weimer Republic Deutsche Mark look good by comparison! We are talking many many more times watering down and corruption of the fiat money than occured at those past times.

    The only solution is go back to being honest with each other and therefore using just weights and measures to do our trading, preferably in smaller community settings at least to start with – keeping it that way is what the problem has always been.

    It is more likely we will see the “big bang” next but NOT in terms of the manner in which evolutionists have always described it!

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