ANZ warns of rising funding costs: Midday Roundup

ANZ chief executive Mike Smith has warned the bank is coming under pressure from rising funding costs that will restrict its margins during the next year.

Speaking at the bank’s annual general meeting, Smith said that despite good core performance, margins are still being tightened and credit growth is slowing.

“In our global markets business, although volatility has continued and the environment is highly uncertain, performance in the first two months is broadly in line with our expectation,” he said.

“And let me say that ANZ is uniquely positioned with the right strategy, focused on the right places, at the right time with the financial strength to see 2012 as a year of opportunity.”

Smith laid the blame for the crisis at the feet of the European crisis.

“As the crisis in Europe continues to deepen, the choices for commercial banks such as ANZ are becoming more and more limited,” he said.

“For us, the cost of funding is rising again… if indeed it is available at all.”

Shares flat after similar overseas lead

The Australian sharemarket has opened flat this morning after a similar lead from the United States, despite growing fears the European Crisis is growing worse.

The benchmark S&P/ASX200 index was up 17.7 points or 0.4% to 4157.5 at 12.10 AEST, while the Australian dollar was trading at $US0.99c.

AMP shares lost 0.46% to $4.33, while Commonwealth Bank shares gained 0.66% to $48.95. NAB rose 0.64% to $23.63 as Westpac rose 0.2% to $20.50.

In the United States, the Dow Jones Industrial Average rose 0.4% or 45 points to 11,868.

Bendigo & Adelaide Bank announces equity raising, Bank of Cyprus acquisition

Regional lender Bendigo & Adelaide Bank has announced a $130 million acquisition of the Bank of Cyprus, funded by a $120 million equity raising.

It has also announced a $95 million writedown, due to a contraction in its margin lending portfolio.

Chief Mike Hirst said despite problems in Europe, “asset and liability growth through our retail network remains towards the top end of the sector, and our credit quality remains sound”.

“However, our margin lending business continues to suffer from a reducing portfolio. This is in line with the broader margin lending industry and is a result of market volatility and a lack of investor risk appetite.”

Others banks targeted in penalty fee class action

Commonwealth Bank, National Australia Bank, Westpac Banking Group and Citibank are facing legal action over fees to customers, following a similar action against ANZ Banking Group.

Law firm Maurice Blackburn and litigation funder IMF have lodged class action proceeding against the other banks, taking the total value of claims to $200 million.

A previous case against ANZ, which is subject to appeal, found that late penalty fees could be classed as a penalty, and were therefore unlawful.

The case also found that honour fees, dishonour fees, over-limit fees and non-payment fees could not be classified as penalties.

ACCC calls for comment on Telstra plan

Meanwhile, the competition regulator has called for comments on Telstra’s structural separation plans.

This follows the Australian Competition and Consumer Commission announcing it had concerns over the revised separation plans.

Submissions are due by January 13, 2012.