Commonwealth Bank describes 2011 outlook as uncertain: Economy Roundup

Commonwealth Bank chairman David Turner has said in the company’s annual report the outlook for 2011 is uncertain and that universal banking regulations will only increase costs.

Turner said in the report that while Australia is still well-equipped to recover from the financial crisis, global economic pace remains “uneven”.

“These risks have not helped domestic business and consumer confidence, both of which remain fragile,” he said. “This fragility manifested itself in a slowing in the underlying momentum in our business at the end of the 2010 financial year.”

“While regulators in some jurisdictions clearly need to address the adequacy of their regulatory regime post the global financial crisis, it is important that we, in Australia, think carefully before adopting a ‘one size fits all’ approach.”

Turn says the major banks in Australia emerged “relatively unscathed” due to vigorous capital requirements and internal processes. He says Australia already has a solid regulatory system for the financial sector.

Meanwhile, ports operator Asciano has raised $US1 billion during a notes offer in order to pay down debt. The company’s settlement is expected to occur next week.

“Substantially all of the net proceeds from this offering of the notes will be used to prepay existing senior indebtedness outstanding under Asciano’s bank facilities,” the company said.

Elsewhere, Alinta Energy has entered a trading halt ahead of an announcement regarding negotiations with the company’s lenders.

“The directors of the company have to meet their own duties and ensure the company is solvent, so management has flagged that administration is likely failing an agreed solution in the coming days,” The Australian has reported a source as saying.

“The reason for the trading halt is that Alinta Energy Group is currently unable to make an immediate announcement pending the outcome of its ongoing discussions with its lending group and advisers in relation to the deleveraging process previously advised to the market,” Alinta said in a statement.

Santos has now completed a $900 million hybrid issue in order to strengthen its balance sheet ahead of a decision to whether to invest in the Gladstone Liquefied Natural Gas project.

The notes issue matures after 60 years and can be redeemed by Santos after seven, the company said in a statement.

Shares higher despite weak Wall Street

The Australian sharemarket has opened slightly higher today, despite a weak lead on Wall Street where investors were disappointed regarding a jump in home foreclosures.

The benchmark S&P/ASX200 index was up 23 points or 0.51% to 4628.8 at 12.15 AEST, while the Australian dollar remained flat at about US93c.

ANZ shares gained 0.8% to $23.84, while Commonwealth Bank shares rose 0.3% to $52.80. Westpac gained 0.2% to $23.33, with NAB gaining 0.2% to $25.83.

Meanwhile, The Australian Financial Review has reported NAB is open to acquisitions in Britain following the abandoning of its proposal for Asia Pacific Holdings.

“Given that NAB is here now it’s a sensible strategy to grow organically and to also look to see if that growth can be supplemented because fundamentally it enhances the value of NAB’s investment here,” Lynne Peacock, NAB chief of UK operations told the paper.

“We’ve always said we would look at things, but we would only do something if it added value and that was demonstrably better than us going it alone.”

Meanwhile, marketing services firm Photon Group has said it’s too early to give a full-year forecast but expects revenue, EBIT and amortisation to be roughly in line with last year. It said 2010 has been a “challenging year” for the company.

Queensland Rail chief executive Lance Hockridge says the company is still in good shape coming up to its $7 billion float.

“The bottom line in this is a business that is in very, very good shape,” he said on ABC’s Lateline Business last night. “It’s a national company with a very big footprint. This is a business that understands exactly what it takes to be successful.”

US stocks flat on economic worries

Fears over the US economy have continued to grow with a jump in home foreclosures and a rise in the country’s poverty rate to 14.3% in 2009 – a 15-year high. The census bureau said 43.6 million people, or one in seven Americans, lived in poverty in 2009. The threshold is $US21,954.

“Our economy plunged into recession almost three years ago on the heels of a financial meltdown and a rapid decline in housing prices,” president Barack Obama said in a statement.

“Last year we saw the depths of the recession, including historic losses in employment not witnessed since the Great Depression,” Obama said. His economic recovery package enacted last year, he said, had helped keep millions from falling into poverty in 2009.

The Dow Jones Industrial Average gained 22.10 points or 0.21% to 10,594.83.