Quantitative easing (QE) was first pioneered by the Bank of Japan (BoJ) way back in 2001, when it was employed as a stimulative economic policy, after the BoJ ran short-term rates down to zero. QE’s mechanism for stimulation is the purchase of debt securities by central banks (in the secondary market), causing the central bank’s reserve supply to increase and [...]
With the Australian Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (the “Commission”) being unusually quiet recently following more reactionary and tabloid-friendly beginnings, we thought it might be a good time to consider what impact (currently) planned divestments by the major banks could have on hybrid valuations and risk. Although not directly prompted by the Commission, [...]
Major central banks around the globe have, for some time now, been granted total independence in making monetary policy decisions in an effort to ensure the prioritisation of long-term economic health over more short-sighted decisions for political motives. President Trump’s comments last week that he is “not thrilled” by recent increases in the Federal Reserve’s Funds rate has broken the [...]
The Reserve Bank of India (RBI) has found itself under close scrutiny recently as a sharp divergence in Non-Performing Assets (NPAs) or “bad loans” reported by India’s state-owned banks plagues the Indian banking system, raising concerns over broader financial stability and inadequate regulatory diligence. The RBI defines a NPA as “a credit facility, in respect of which the interest and/or [...]
Given the prominence of the Financial Services Royal Commission and increased foreign activity in the M&A space so far this year, regulators such as the Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulation Authority (APRA) have regularly appeared in our news feeds. Last week, however, it was the Australian Energy Regulator (AER) and the Australian Competition and [...]
In Australia, there are two main forms of regulatory capital that financial institutions (FI’s) must hold to manage the risks inherent in their operations and ensure stability of the economy - Tier 2 and Tier 1 capital. Tier 2 capital securities rank below senior debt but above Tier 1 capital in the capital structure. Most commonly Tier 2 capital is [...]
Too much is made of the Reserve Bank of Australia’s (RBA) overnight cash rate and the Federal Funds rate of the U.S Federal Reserve, with market observers not having to search far for diverse and divergent markets commentary and insights. There is comparatively little commentary however, to understanding what a Reserve Requirement Ratio (RRR) is and the arguably equally important [...]
It’s been over a year since we first commented in our article Will we see Tier 3 in Australia? about whether APRA could be contemplating a new Tier-3 capital class for the domestic big 4 banks. This would form the Australian response to the “Total Loss-Absorbing Capacity (TLAC)” regime being imposed on the world’s largest banks by international regulators. As [...]
Since the division of Korea at the end of World War 2 in 1945, the two countries occupying the North and South sides of the Korean peninsula diverged on to two completely different economic paths. Whilst South Korea has experienced one of the largest economic transformations over the past 60 years, becoming the 4th largest economy in Asia and 11th [...]
The concept of a risk free-rate, or the yield of government-issued securities, has long been one of the fundamental building blocks of capitalism and the basis of modern financial literature. It is a concept so intuitive that the general investing public in much of the developed world has largely taken for granted, both academically, and in most cases, in practice. [...]
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An employee-owned financial services provider focused on the Debt Capital Markets.
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ABN 31 164 148 467 ‧ Important Information
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