The big four banks – Westpac, ANZ, NAB and Commonwealth, which have most to lose from the Murray Inquiry’s recommendations that they boost capital held on their lending businesses– are outperforming most other stocks on a strong day for the ASX.
National Australia Bank, which has the smallest mortgage business of the four major banks, is posting the strongest gains – up 1.75 per cent to $32.97.
Westpac has risen 1 per cent to $33.33 and ANZ is up 1 per cent to $32.38.
The country’s largest home lender, Commonwealth Bank, has rallied 1 per cent to $82.36.
Regional banks such as Bank of Queensland and Suncorp have lost ground on the share market despite being major beneficiaries of the inquiry’s reforms. BOQ is down 2 per cent to $12.27
Stock market analysts said the impact of the Murray reforms on the big banks was not likely to be as deep as the market had been expecting late last week.
The Murray inquiry has recommended that the major banks be forced to put aside more cash to cover for lending risks in their bulging mortgage businesses.
If the changes are implemented banks will have to issue up to $25 billion worth of the new shares to fund their new capital obligations.
While that is a lot of money, stockbrokers said that investors had sold down bank shares in recent weeks on expectations that the additional capital cost might be as high as $50 billion.
“Brokers thought the four major banks were facing far worse outcomes,” a Sydney-based broking analyst said.
“Those worst case scenarios were reflected in the recent share price declines, so the banks are rallying today.”