DrWho

I read somewhere that the way to see what the markets thought of the financial stability of banks/governments was to see what it cost to insure against default by those banks/governments... but I don't know where to look to find that out...!

And right now I'd really like to see what the markets think of the main Aussie players...

Answers on a postcard pls...

NedKelly

That would be nice to know because the Aussie banks don't have any guarantee if they go bust. You lose everything.

TiddlyPom

I believe there's only a couple of Aussie banks which have high amounts of investments abroad - NAB and Macquarie.

They estimated the cost to cover those investments from going bust at a few million dollars, AU. They didn't seem to think there was any problem with doing this considering their yearly profits.

Both NAB and Macquarie Bank said their exposure to Lehman Bros was negligible for a start.

WHilst the other banks are affected by confidence in the market, Australia AFAIU, doesn't have their toes dipped in any of the overseas pond in a way which would cause financial collapse in Aus.

In this case, it seems to pay to be insular.

Looking forward to Oz

That reasuring - thanks. x

Grayling

.....but most Australian banks are part of the same parent group as those in other parts of the world ie. Natwest / RBS / Commonwealth or Barclays / Westpac etc.

These problems are global.

TiddlyPom

From my understanding, yes, it's global, but minimally so. The articles I've read suggest that the impact will be much less because of this.
I guess we won't know until something happens... Keep watching the skies!

Petals

Going on previous problems that we have experienced in the past state and federal govs are unlikely to let a bank or lending institution go under without some assistance. We tax payers in Victoria had to pick up the
Geelong building society tab years ago. Banks and other financial inst tend to get swallowed up by another when something happens.

We have done very nicely when this happens as we end up with shares in another one.

GinaUK

That's not correct.

The Commonwealth Bank has no connection with Natwest/RBS (or any other European banking institution). The Commonwealth Bank owns some other financial institutions in Asia-Pacific, but Commonwealth is the parent (it's not owned by anyone else). It's now buying BankWest and may also buy Suncorp.

Westpac also owns some other financial institutions in Asia-Pacific (soon +St George). It has no links to Barclays nor is it owned by anyone else. Westpac *is* the parent.

As to the global problems: As Tiddly said, Australian banks don't have many of the now worthless overseas sub-prime investments

What does affect the Aussie banks the same as other banks around the world is that the inter-bank rates for borrowing money from each other have gone up dramatically (because banks are nervous about lending to each other and there is therefore less money to go round). That's the reason why the Aussie banks don't want to pass on today's rate cut by the Reserve Bank in full.

Gina

asprilla

beat me to it!

Grayling

Let's wait and see eh?

Certainly a lot of confidence has been lost in the Australian system as witnessed by the rapid decline in the dollar.....just a coincidence?

bradfordlad

www.dailyreckoning.com.au/future-fund-3975/2008/10/07/

GinaUK

The fall of the Aussie dollar has absolutely nothing to do with the Australian banking system. [sigh]

It has everything to do with large falls in commodity prices, the prospect of a protracted global recession and the anticipated larger-than-usual cut to domestic interest rates today. www.ozforex.com.au/cgi-bin/dailycommentary.asp

Gina

NedKelly

Bradfordlad, can you repost the link I can't get it to work. Thanks

Grayling

Whatever.....the economy still looks like it is heading down the pan.

What next for jobs and house prices?

asprilla

I'll tell you what next.... unemployment currently at 4.1%, this will rise slowly over the next two years to 5.5%.

House prices will fall slightly/remain static between now and mid 2010 when they will start to slowly grow again.

Hope this helps !