Personal loans down 0.7% in July, Aussie dollar hits four-month high: Economy Roundup

Personal finance commitments fell by a seasonally adjusted 0.7%, according to the latest information from the Australian Bureau of Statistics, with fixed lending down 1.2% and revolving credit commitments falling 0.3%.

Housing finance commitments increased by a seasonally adjusted 2.3% during July rising to a total of $13.7 billion.

The total value of commercial finance commitments increased by 8.2%, with fixed lending up 9.2% and revolving credit up 5.7%. Total lease commitments rose by 3.2%.

Overseas, global financial regulators have agreed to new rules that would force banks to increase their capital reserves in order to avoid another financial meltdown seen during 2008 in the financial crisis.

The Basic III banking regulation rules will require banks to have top-quality capital totalling 7% of risk-bearing assets, up from the current laws stipulating a 2% holding.

“The agreements reached today are a fundamental strengthening of global capital standards,” European Central Bank president Jean-Claude Trichet said in a statement. “Their contribution to long-term financial stability and growth will be substantial.”

The laws will require banks to substantially increase their holdings. Germany has said its 10 largest banks could need to raise more than $143.5 million in capital. However, the laws include transition timetables to acquire the capital.

One of the more controversial proposals will require banks to have a separate “capital conservation buffer”, equivalent to 2.5% of assets. Another provision will see banks build a “countercyclical buffer” for between 0-2.5% when credit markets are performing well.

However, some analysts have questioned the slow timetables, with the first rules only to take effect from January 2015.

“The phasing-in period for the new capital requirements is surprisingly long, which will add to the scepticism about the robustness of the bank capital enhancement efforts,” co-chief investment officer of bond investment group PIMCO Mohamed El-Erian told Reuters.

Germany received a concession in its rules, obtaining a decade-long “grace period” from 2013 in order to rule out some of its laws such as “silent participations”.

Meanwhile, RBA director Graham Kraehe has told The Australian the Government should consider a GST review as part of its upcoming tax summit. He told the publication that not including GST showed a “lack of will for genuine reform”.

“The tax summit should not ignore the elephant in the room: GST,” he said. “It should also ensure a full public debate on proposed resources taxes.”

Australian dollar reaches four-month high

The Australian dollar has reached a four-month high due to strong economic data coming out of China. The dollar was sitting at over US93c at 12.20 AEST.

The Australian share market has also opened higher this morning, following from the same economic data from china. The benchmark S&P/ASX200 was up 54 points or 1.2% to 4614.8 at 12.20 AEST.

ANZ shares gained 1.2% to $24.00, while Commonwealth Bank shares rose 1.2% to $53.28. NAB rose 1.9% to $25.14 as Westpac gained 1.5% to $23.29.

Markets have reacted to news form China that industrial production gained 13.9% during August, compared to the same period in 2009. It is the biggest increase since May, according to the country’s official statistics bureau, while retail sales grew by 18.4% in August.

NAB will announce “in the next few days” if it will continue working with AXA Asia Pacific or instead abandon the deal, wealth group executive Steve Tucker told ABC last night.

“I mean, that’s the sensible thing to do, just take our time and think it through, and we’ll make a pretty timely decision over the next few days,” Tucker said.

”You have to be careful to get the balance between satisfying the concerns of the ACCC and keeping the integrity of the value of the deal in place,” he said. “We thought we’d done that with a good package. We were disappointed to get the ‘no’ decision.”

PBL Media is investigating the possibility of an IPO in 2011. Chief executive Ian Law told the Australian Financial Review that it may bring forward plans for a 2013 float.

“PBL Media has to be recapitalised at some point before then,” he said. “CVC has significant resources and the ability to stay the course, but on balance an IPO is the most likely outcome.”

ANZ names New Zealand chief

ANZ Banking Group has announced it has named David Hisco to head its New Zealand business following the resignation of former chief executive Jenny Fagg.

“We’re very pleased to have someone of David’s experience and seniority within the ANZ Group to lead the business in New Zealand,” ANZ National Bank chairman Dryden Spring said in a statement.

“Importantly, David’s lived and worked in New Zealand and he knows many of our New Zealand staff and customers.”

Meanwhile, minerals testing group Ammtec has said it is in a trading halt ahead of an expected takeover offer from Campbell Brothers.

The company said in a statement it requested a halt following the market opening, pending an announcement regarding a “potential development”.