AFR Summit Highlights: Financing Australia through the Crisis - Financial Services, Australia's economic shock absorbers April 2020 - Deloitte
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AFR Summit Highlights: Financing Australia through the Crisis Financial Services, Australia’s economic shock absorbers April 2020
Financing Australia through the Crisis | AFR Summit Highlights
OPENING ADDRESS
RICHARD DEUTSCH
CEO, DELOITTE AUSTRALIA
See Richard Deutsch speak live here
Key messages
• The Prime Minister said: ‘We must keep business going.’ For governments this means creating
fiscal policy and budgets.
We all need to work together, at pace,
• For business, shoring up funds for cashflow to protect businesses, jobs and incomes. to protect Australians from the virus,
cushion the economic impact of COVID-19,
• For the finance sector – a key role in mortgage deferrals and other support measures.
and help rebuild and regenerate our
This all needs extraordinary collaboration.
wonderful country.
• The National COVID-19 Coordination Commission, where government and private sector leaders
It will take great leadership. We all need
are working on mitigating the impact of the crisis, is an example.
to be calm, confident and resilient when
• Achieving this collaboration requires great leadership. Leaders have a responsibility to help others everything that was once certain, has
see the big picture, and that includes the long-term outlook. been turned on its head.
• Companies must have clear communication and be transparent about what they’re doing to keep Deloitte, like many of us in business, has
their people safe and businesses moving. been called on to play our part in helping
the market respond in this time of crisis.
• We have a responsibility to keep people in jobs – right now, 3.3 million workers are at severe risk.
• Let’s use this situation as a catalyst to think about the future of work. Let’s focus on the longer-term strategy
of the country, and the purpose of the
• Deloitte’s 2024 strategy is to be ‘people-led and technology-enabled’. In this crisis, we’ve moved private sector and banking and wealth
to a virtual office environment where more than 85% of teams are working remotely. industry specifically – to rebuild and
regenerate Australia to a great place
• This will be a critical six months where the business community has a significant role to play in helping
to live and work, for us and our children.
Australia respond to this crisis. We must be calm, confident and resilient.
© 2020 Deloitte Touche Tohmatsu
Financing Australia through the Crisis | AFR Summit Highlights © 2020 Deloitte Touche Tohmatsu
Financing Australia through the Crisis | AFR Summit Highlights
AN ECONOMIC PILLAR IN A TIME OF UNCERTAINTY
MATT COMYN
CEO, COMMONWEALTH BANK OF AUSTRALIA
& CHAIR OF THE AUSTRALIAN BANKING ASSOCIATION See Matt Comyn speak live here
Key messages
• We all must play our role to reduce the transmission of COVID-19 across all parts of
the community. This is a dynamic situation that needs flexibility to shut this down as
Having very well-capitalised banks with
soon as possible.
lots of liquidity is fantastic at this point
• By all working together now, once that rate is down, Australia’s banks, government in the cycle. The reality is we will need it.
and core infrastructure will be able to kick start the economy.
APRA is aligned, being pragmatic,
• Steps are being taken now for that future recovery. I am impressed by how easily and accessible and making quick decisions.
constructively government and regulators are communicating and sharing information.
We need to work within the remit of what
• Australia is not facing an Italian-style problem, however we are preparing for a possible – the country can achieve. Measures need
not probable – business hibernation of up to six months. But we can’t be sure. to be practical and need to be able to be
delivered.
• A number of large corporations will need a draw down. The Commonwealth Bank will prioritise
critical Australian companies that are large employers of people. I don’t believe there’s an imminent risk
of a rating agency downgrade at the
• We are expecting more containment measures, and an oscillation of conditions over the coming
sovereign level. Fortunately, we start
months. We forecast a 10% decline in economic activity in the March quarter and an even bigger
from a very strong position.
hit to the economy in the June quarter.
It is important that when employees
• There will be a spike in business lending defaults.
are stood down, they are not let go.
• The banks announced payment deferrals of up to $10m for six months given the expectation We don’t want to lose the connections
that 98% of businesses in Australia will require this, demonstrating how close the collaboration between employees and employers.
between the banks and APRA is to support the economy.
© 2020 Deloitte Touche Tohmatsu
Financing Australia through the Crisis | AFR Summit Highlights © 2020 Deloitte Touche Tohmatsu
Financing Australia through the Crisis | AFR Summit Highlights
SUPER INDUSTRY RESPONSE TO MARKET VOLATILITY
DON RUSSELL
CHAIR, AUSTRALIANSUPER
See Don Russell speak live here
Key messages
• Superannuation has been an extraordinary creator of wealth for millions of Australians over
the past 20 years – time in market is very important.
This is not the time to revisit the super
• The S&P/ASX 300 Index has delivered 8.3% pa returns over 20 years, but if the investor was wars. It’s time for people to carefully
out of market for e.g. the 10 best days of those 5100 trading days, their annual return would fall examine their assets, to use what we
to 5.8%; the 15 best days, their return would fall to 4.8%. have in the best way we can, and to
make sure our systems operate in
• So far 2-3% of AustralianSuper funds under management have been switched to cash –
the best possible way for the benefit
about $5bn of a $170bn fund – which is manageable. BUT the more you trade the more of super members and the Australian
you lose. Switching is risky! economy itself.
• AustralianSuper estimates approximately 300,000 people will access their super early Switching in and out of the balanced
and it is possible four million people will do so. fund is risky…when members switch
• Treasury estimates $27bn will go in early release from super funds, far short of the more likely to cash they are often unsure when
~$40-$50bn, which will hamper the long-term funding support for Australian businesses and to switch back.
investment in long-term projects. It penalises existing members who didn’t
• Super funds are already receiving inquiries about capital raisings from companies and investment take early withdrawal, because funds
won’t be able to give accelerated returns
banks – which will prove invaluable in the next 6-12 months as Australian companies strengthen
to ride the rebound.
their balance sheets.
The more super funds have to manage
• AustralianSuper has invested ~$5.5bn in equity raisings recently.
the liquidity around an early release
• There is extreme volatility at present. This March, there were seven out of the 15 largest declines and deal with the switching requirements
in 20 years, each less than -5%, and at the same time four of 15 largest increases in 20 years, each of their members, the less able they’ll
greater than 4%. be to fund the long-term needs of
Australian businesses.
© 2020 Deloitte Touche Tohmatsu
Financing Australia through the Crisis | AFR Summit Highlights © 2020 Deloitte Touche Tohmatsu
Financing Australia through the Crisis | AFR Summit Highlights
CORONAVIRUS ECONOMIC IMPACT ON THE FINANCIAL SERVICES SECTOR AND GLOBE
DR PRADEEP PHILIP
PARTNER, DELOITTE ACCESS ECONOMICS
See Dr Pradeep Philip speak live here
Key messages
• First a $66bn Federal Government support package; then a whopping $130bn for six months
to subsidise Australian workers’ wages hit by the health crisis.
A series of unknowns underpin
• A health crisis needs a health response. Testing is critical and thankfully Australia is on par with the health crisis... Underpinning
South Korea on this. The immediacy of acting to avert the health crisis has to be first and foremost. the economics is fear.
• COVID-19’s impact is now exponential, in terms of the rate of virus transmission, loss of confidence In such a world, conventional responses
and loss of jobs. don’t work. Unconventional responses
• The focus of the first economic phase is cushioning, then hibernation. But building for recovery are required and narrative is just as
is a must. The financial sector will be critically important in achieving this. important a tool as policy responses.
• Can’t ignore economics. Reopening global borders will be key to recovery. Australia’s corporations The Reserve Bank has been aggressive
and policy makers are critical in dealing with the human cost of economic crisis. and unequivocal. Fiscal policy started
• Unlike the GFC, it’s a demand and supply shock simultaneously. Domestic and global supply predictably but has morphed into the
chains are broken. This makes recovery more difficult. unconventional.
• Coming out of this we can embark on new reforms for innovation and economic growth. The paradox of safety: when faced
with a choice we all choose the option
• This is no black swan event, rather it is what Michelle Wucker describes as a Grey Rhino – highly
we see as safer. No-one wants to be the
obvious and highly probable but still neglected.
person who didn’t do enough. But when
• The things we strived to build – connection, globalisation, interconnectedness, integrated supply we all lurch to safety, fewer risks are
chains – were all built off the back of our victory over infections and viruses. Now, they all seem taken and less money is spent.
to be working against us, transmitting a virus fast and stealthily.
It takes every one of us to behave
• About one million jobs were lost last week, the economy was heading to a deep recession, responsibly to have a collective solution.
unemployment was tracking towards 12%, and growth for the calendar year was likely to be a minus Economies can recover, the dead can’t.
5%. But fortunately, this has been met with a policy response which might just halve the negative
employment impact we would otherwise face over the coming months.
© 2020 Deloitte Touche Tohmatsu
Financing Australia through the Crisis | AFR Summit Highlights © 2020 Deloitte Touche Tohmatsu
Financing Australia through the Crisis | AFR Summit Highlights
BANK RESPONSE TO THE CRISIS
SHAYNE ELLIOTT
CEO, AUSTRALIA AND NEW ZEALAND BANKING GROUP
See Shayne Elliott speak live here
Key messages
• Protect, Adapt, Engage, Prepare.
• The speed of impact is what is different about this crisis. The tools adopted by big business Our economy is an open economy, it does
and policymakers during the GFC will not necessarily work against the COVID-19 crisis. rely on tourism and foreign students. It’s
really hard to imagine those things will go
• Out of ANZ’s 130,000 small business customers, under 10% have reached out to date. back to normal within three to six months.
It’s early stages and will take time to digest the situation before customers engage.
We are still at the very early stages, so a
• Stimulus is the wrong word for the current economic situation. Right now, the approach needs lot of our customers are literally just shell
to be similar to dealing with the virus – isolation. For example, an issue in retailing must not impact shocked. They’re working through their own
landlords etc. The focus needs to be on protecting customers dealing with debt, loans and tax. crisis in terms of what needs to be done.
• The banks have gone into this crisis in ‘remarkable health’. We have strong levels of capital What we know from history is that the
economy after a crisis always looks very
and liquidity as a buffer, which is why we can support Australians.
different to the economy pre crisis. It will
• But we also must ensure we’re not spending all our resources surviving this. We must be prepared change and consumers will also change
for when the rebound comes so that we’re on the front foot. their behaviour.
• Banking will ultimately shift to digital channels, as more customers adapt to behaviours learned People will learn they quite like this digital
part of life: ‘I quite like doing banking on
during the crisis. The boards of all companies will be adapting too: asking questions about supply
my phone and I’m not going to go to the
chains, manufacturing facilities, staffing strategies and technology.
branch as much as I used to, even though
• We need to deploy our resources to support customers with sustainable business models it was a habit’.
who will come through this in better shape. Most of ANZ’s business customers will meet this We are the intensive care units (ICU)
criteria but we need to consider how we’re spending our resources. of the economy. We will ultimately have
the unenviable task of deciding which
businesses to save or not.
© 2020 Deloitte Touche TohmatsuFinancing Australia through the Crisis | AFR Summit Highlights © 2020 Deloitte Touche Tohmatsu
Financing Australia through the Crisis | AFR Summit Highlights
WILL COMPETITION SURVIVE THE CURRENT CRISIS?
ROD SIMS
CHAIR, ACCC
See Rod Sims speak live here
Key messages
• Competition must survive and it will survive. It must survive because a market economy only works
with competition. It will survive for three reasons:
For Australia to emerge strongly, it’s
– This is a health crisis, not a true financial crisis – so when the recovery comes we fundamental we keep our economic
will know it. There will be a ‘clear line in the sand’ when the economy can reopen structure intact. We don’t want a less
– People at home are doing tasks that they wouldn’t ordinarily do, like making lunch, competitive economy. That would be
home-schooling etc. In recovery, demand for these services will return a long-term negative legacy.
– The economy will be assisted by temporary measures. But these are not structural We’ll know when the recovery occurs,
measures – and will be removed in recovery. unlike a financial crisis where we’re not
• For the ACCC, temporary measures include authorising actions that would ordinarily be quite sure when we’ve turned a corner.
anti-competitive, such as allowing banks to coordinate relief on loan payments; supermarkets At some stage we’ll have a clear line in
working together to ensure supply. the sand.
• Rather than suspending competition laws, the ACCC is granting permission in specific circumstances Normally, coordination leads to
to manage this crisis. complacency, inefficiency and high prices.
These are not normal times. For now,
• Be assured the ACCC is keeping a watchful eye to ensure businesses are not taking advantage coordination is important and can work.
of customers and to ensure Australians are protected against scams.
The type of actions the banks are taking
• To ensure Australia has a strong market economy after the crisis, the ACCC will unequivocally focus you can only applaud. They are not ones
on the need to protect competition. you need to worry about.
• This will not mean increasing leniency on mergers during the crisis and will mean we will continue We have a lot of scams going on, which
to work on competitive measures e.g. the Consumer Data Right reforms. we’re dealing with, and there is a range
of price-gouging activity, which we’re
dealing with.
© 2020 Deloitte Touche TohmatsuFinancing Australia through the Crisis | AFR Summit Highlights © 2020 Deloitte Touche Tohmatsu
Financing Australia through the Crisis | AFR Summit Highlights
SUPPORTING SMALL BUSINESS THROUGH RECESSION
ROSS McEWAN
CEO, NATIONAL AUSTRALIA BANK
See Ross McEwan speak live here
Key messages
• We have had approximately 200,000 inquiries across the network on loan deferrals – a year’s worth
of inquiries received in a week. Around 8% of our business customers have applied for loan deferrals.
There is no playbook for this crisis.
We expect this number to rise exponentially.
We have not seen a health and financial
• The balance sheet is the priority at the moment – the bank is in a strong position and is ready crisis happening at the same time before.
to support the economy and small and large businesses. History will be written on who got it right
or wrong.
• NAB is expecting substantial GDP drops in the June and the September quarter. We expect
unemployment to rise exponentially. Once this is over, will we see a return
to the personal, on-the-spot service and
• This is not the time to push for more regulatory change. This is the time to rebuild trust post-Hayne,
branch networks we’ve been used to?
by looking after our customers and colleagues.
Will I need all the buildings I have given
• Banks have to work through an allocation of their finite resources. It is not possible for the banks
some of my work colleagues can do their
to save all the businesses in this crisis. NAB is going to prioritise existing customers with robust pre-
work from home in the future?
crisis businesses.
I’m not sure companies can actually
• Big banks like NAB have adapted and responded to the crisis quickly:
hibernate for six months. It would
– 75% of NAB’s 34,000 employees are now working from home be a very big strain on everybody’s
– 75% of NAB’s contact centre employees are working from home balance sheet.
– NAB activated its mortgage advice via video conference in three days You have to be very open and honest
– Before the crisis, the bank estimated it would take around 12 months to activate. with customers – sooner rather than later.
Some businesses were struggling before
this virus and they will be in even more
difficulty today.
© 2020 Deloitte Touche TohmatsuFinancing Australia through the Crisis | AFR Summit Highlights © 2020 Deloitte Touche Tohmatsu
Financing Australia through the Crisis | AFR Summit Highlights
WEATHERING THE STORM IN WEALTH MANAGEMENT
FRANCESCO DE FERRARI
CEO, AMP
See Francesco De Ferrari speak live here
Key messages
• Our immediate priority should be to stabilise the health system. We should not underestimate
the impact of this virus. Italy initially underestimated the impact and is now going through adverse
This is clearly a time of significant
consequences. uncertainty in Australia and around the
• The lesson for us is to work together with the government, regulators and the community to resolve world. Our immediate priority must be
this as quickly as possible. on protecting the health of our people
and the functioning of our health system.
• In Australia, we have a $3tr compulsory superannuation system that is the envy of many
countries, but this crisis is highlighting a few challenges we really need to work through. Economies and markets can,
and will, recover.
• Inquiries at AMP’s call centres and to its financial advisers are at its highest level. People are
We must use this crisis as a catalyst to
looking for advice and direction. AMP is committed to helping its customers and the community
address the big advice gap we have in this
in these uncertain times. country. It’s an issue that we must get right
• Australians are disengaged from their superannuation. Approximately 70% are in default MySuper for everyone and not just the wealthy.
options. Only 35% of Australians know their super balance. And the majority do not have the fund My brother-in-law runs an ICU unit in
to suit their individual circumstances. Northern Italy and describes it as ‘being
• Members need to be aware of factors beyond the performance of their fund and account at war’. He said: ‘If you’re leading a large
company, do whatever you can to protect
for their risk profile according to their life stage and employment circumstances. the health of your employees and to look
• As an industry, we need more transparency on risk-adjusted performance and ensure diversification after your clients.’
of risk and sound management of liquidity. When it comes to investing, my experience
• Australia has a big advice gap. According to ASIC surveys, one in two adults or approximately is that even the most sophisticated and
10 million people have unmet advice needs. In 2019, only 12% of Australians received financial advice. wealthy investors have a really hard time
remaining rational when stock markets
• AMP wants to collaborate with the regulators, government and the industry to design keep going up and the fear of missing
an advice model for the future – accessible and affordable for all Australians. out kicks in.
© 2020 Deloitte Touche TohmatsuFinancing Australia through the Crisis | AFR Summit Highlights © 2020 Deloitte Touche Tohmatsu
Financing Australia through the Crisis | AFR Summit Highlights
VIEW FROM TREASURY
JANE HUME
ASSISTANT MINISTER FOR SUPERANNUATION,
FINANCIAL SERVICES AND FINANCIAL TECHNOLOGY See Jane Hume speak live here
Key messages
• Fiscal discipline of the Government has been really helpful – the rainy day has now arrived.
• We will recover strongly but this country will never be the same again, and every industry As Warren Buffett famously noted, it’s only
is likely to change. The superannuation sector is not immune. when the tide goes out you learn who has
been swimming naked. Today I want to talk
• Australia’s super industry is approximately $3tr; roughly double the size of ASX and ~150% about the perils of skinny dipping… as the tide
of Australia’s GDP. retreats, we’re seeing too little speedo and
too much skin.
• The Government believes that, for those who are significantly financially impacted by the
coronavirus, accessing some of their super today may outweigh the benefits of accessing When we emerge from this crisis, every single
the funds in their retirement. part of the economy, every single Australian,
will have a role to play in building our bridge
• The minister has warned super funds to cooperate with the Government to release members’ to recovery.
money on their request and could ask APRA to intervene, if necessary.
This is a time where cooperation between the
• This could pose liquidity challenges to some super funds – particularly those with undiversified private and public sectors is key…The banking
members and those significantly impacted by COVID-19. sector has really stepped up to demonstrate
its commitment to Team Australia.
• The Government is working with ASIC to ensure issue-specific advice is available and affordable.
This is a great opportunity for the advice sector to demonstrate its value. The Government’s aim is clear: to save lives
and livelihoods, to keep Australians in jobs,
• The minister is committed to ensuring the smooth functioning of the fintech industry. Competition, to keep Australian businesses in business, to
access to finance and innovative solutions have never been more important. cushion the blow for as many as we can, and
to build a bridge to the other side of this crisis.
• Extraordinary times require extraordinary measures. We face a global challenge like we’ve
never faced before. By working together, we will get to the other side and bounce back stronger. There is no doubt we will recover, but we all
Australians will remember who stepped up and who checked out. know this country will never be the same again,
and every industry in Australia will change.
© 2020 Deloitte Touche TohmatsuFinancing Australia through the Crisis | AFR Summit Highlights © 2020 Deloitte Touche Tohmatsu
Financing Australia through the Crisis | AFR Summit Highlights
INDUSTRY RESPONSE TO COVID-19
ANNA DEANNE ERIC
BLIGH AC STEWART WILSON
CEO, AUSTRALIAN CEO,FIRST STATE SUPER FOUNDER, XINJA
BANKING ASSOCIATION See the panel live here
Key messages
• Tighter restrictions • While we want to provide • The neo banks will survive
This is the firepower of the Australian banks
in movement are now support for customers that this crisis. While it’s going helping to see us through the crisis.
impacting larger businesses. are experiencing hardship, to be tough, that’s true of
There is no doubt that Australian banks came
it’s important they see early every business right now.
• The expansion of the business out of the royal commission with some big
access to super as a last resort.
support package to cover • The capital injection into Xinja lessons about community expectations…
Taking money out now will What you’ve seen in the last two to three
all businesses with loans from Middle East investors last
crystalise market losses. weeks is banks responding [to that]. I’ve been
up to $10m will be significant. week is a vote of confidence
inside a lot of big emergencies and disasters
• First State Super’s advice in Australian fintechs.
• It will account for 98% and it requires people to bring their best.
business had an increase of – Anna Bligh
of all Australian businesses. • Neo bank models are different
50-70% on business as usual.
– we are disruptors and can
• While it’s difficult to tell what First State Super will cut admin
respond differently.
the demand for SME relief fees for retirees by 10-40%
The market will recover and we will live
will be, the banks and APRA for some members. • We could have followed the
to see another day.
need to be comfortable that traditional model of reducing – Deanne Stewart
• While markets have dropped
they can provide for 100% our interest rate and chasing
30%, First State Super’s fund
of applications. customers. Instead, we
is tracking from peak down
decided to close off taking
• It is inevitable the numbers will just over 10%, because it is well We are absolutely behind the financial
new customers for this account services industry pulling together.
grow – potentially exponentially. diversified. Just 2% of First
and keep our rates at 2.25%. This is a wonderful affirmation of Australia’s
State Super’s members have
• Without the cost of lending at place in the fintech market – the fact that we
been ‘panic switching’ to cash.
can still punch above our weight as a fintech
the moment, we can bear that.
industry even at this time.
– Eric Wilson
© 2020 Deloitte Touche TohmatsuFinancing Australia through the Crisis | AFR Summit Highlights © 2020 Deloitte Touche Tohmatsu
Financing Australia through the Crisis | AFR Summit Highlights
IMPACT ON REGULATION, COMPETITION AND EMPLOYMENT
GRAEME PROFESSOR NATHAN
SAMUEL AC IAN HARPER REES
CHAIR, CAPABILITY BOARD MEMBER, RESERVE ASSISTANT NATIONAL
REVIEW OF APRA BANK OF AUSTRALIA SECRETARY, FINANCE See the panel live here
SECTOR UNION OF
Key messages AUSTRALIA
• Australia has a very sound • We have been looking for • The banks have a
This is a moment where the banks
regulatory system. The productivity improvements challenging balancing act can redeem themselves… As we come
regulators have acted swiftly for years. There is a real between staff safety, financial out on the ‘other’ side they will have
to resolve the crisis. The great possibility that we’ll be forced and operating imperatives disrupted a lot of arrangements which
strength of APRA is that it to think about new products, and customer safety. These were impeding progress.
has its finger on every pulse new services and new ways are unprecedented times. Competition is in the public interest until
of doing things, beyond just
as far as the financial • This crisis has brought it’s not. We can do a whole lot more damage
digitisation. We could really see through instability than we can do good
institutions are concerned. forward trends on remote
a renaissance in the financial by being fetishist about competition policy.
• APRA’s hard work over the services industry and beyond. working and digital migration
– Professor Ian Harper
years is now paying off. • Banks are seeking to do the by five or six years. It is
Financial stability has never right things for the community a potential game changer
been more important. and this is an opportunity for for the industry.
them to rebuild trust. Given There’s a whole range of new players that
• Coordination between • There should be a qualification/
their strong balance sheets, will find the going tough. That’s where the
the regulators will result skill set accreditation scheme big banks will find their ascendancy. They
in much better outcomes the majors are likely to extend adapted by the industry and have very good balance sheets.
significant support to Australian
during the crisis. the major banks to promote – Graeme Samuel AC
businesses and households.
• Financial stability must take workforce mobility across
• However, they cannot be the banking industry.
priority. Competition will return expected to save the entire
in time. We can’t have an economy. Banks have to • Quite optimistic about No one, if they are honest, knows where
inadequate or inappropriate make sure that they allocate a V-shaped recovery. this crisis is going to end up. This has brought
introduction of open banking. forward what would have otherwise occurred
their finite resources in the
over five or six years.
I suspect it won’t happen in July. right direction.
– Nathan Rees
© 2020 Deloitte Touche TohmatsuFinancing Australia through the Crisis | AFR Summit Highlights © 2020 Deloitte Touche Tohmatsu
Financing Australia through the Crisis | AFR Summit Highlights
DEBT AND EQUITY MARKET MAYHEM
SHARAD KATE CHRISTOPHER
JAIN HOWITT JOYE
DIRECTOR, FINANCIAL PORTFOLIO MANAGER, CIO, COOLABAH CAPITAL
INSTITUTIONS RATINGS, FIDELITY INTERNATIONAL See the panel live here
S&P GLOBAL RATINGS
Key messages
• S&P is forecasting that • We need to focus on protecting • In the credit investment
We forecast a strong rebound in calendar
we’re in a global recession – the productive capacity of market, the mid-market year 2021. But it is a changing situation...
but it looks very different Australia. Australia’s good may be vulnerable given the we consider the banking system is
to previous downturns. macroeconomic run has government support for ‘too sufficiently resilient to withstand the crisis.
created companies with big to fail’ institutions and SMEs. There is a significant buffer in earnings.
• Australia is expected to
business models that don’t – Sharad Jain
see a strong rebound in • It’s also likely that smaller
have an automatic right to
2021 although this forecast non-banks are going to
continue to exist.
is subject to adjustment. struggle and the big banks
The banks are the cookie jar of the nation
• These may not emerge are going to be able to reassert
• The Australian banking system and we’re bloody lucky we have them.
from the crisis. A number themselves in this environment.
is strong enough to absorb When it comes to the new players... in an
of technology players that
this temporary downturn. • There is unanimity and upmarket we call it ‘fintech’ and in a down
don’t have sustainable
cohesiveness among banks market we call it shadow finance.
• Given the significant buffer in profits, may also struggle
and policymakers in dealing – Kate Howitt
their earnings, banks could in this environment.
with the crisis, despite
withstand a sixfold increase
• The banking royal commission historical tensions.
in loan defaults without
will be seen in hindsight as This is an opportunity for the Australian
needing additional capital.
a catalyst for change, forcing banking system to swing 180 degrees
banks to adopt a community- in community perceptions.
first mindset in time for this The first problem is markets weren’t
crisis. We will look back and say: prepared to price a global pandemic.
‘Well, thank God they did that’. It was clear liquidity would evaporate
unless central banks intervened.
– Christopher Joye
© 2020 Deloitte Touche TohmatsuFinancing Australia through the Crisis | AFR Summit Highlights © 2020 Deloitte Touche Tohmatsu
Financing Australia through the Crisis | AFR Summit Highlights WATCH IN FULL HERE Richard Deutsch & Matt Comyn Don Russell Dr Pradeep Philip Shayne Elliott Rod Sims Ross McEwan Francesco De Ferrari Jane Hume Anna Bligh AC, Deanne Stewart & Graeme Samuel AC, Professor Ian Sharad Jain, Kate Howitt & Eric Wilson Harper & Nathan Rees Christopher Joye © 2020 Deloitte Touche Tohmatsu
Financing Australia through the Crisis | AFR Summit Highlights CONTACTS ARTHUR NEIL KATHERINE PAUL CALIPO BROWN MILESI REHDER acalipo@deloitte.com.au nbrown@deloitte.com.au kmilesi@deloitte.com.au prehder@deloitte.com.au +61 426 849 793 +61 410 045 601 +61 416 194 071 +61 403 062 697 GRAHAM KATHERINE ANDREW JOEL MOTT HOWARD PELLOW LIPMAN gmott@deloitte.com.au kahoward@deloitte.com.au apellow@deloitte.com.au jlipman@deloitte.com.au +61 414 408 742 +61 418 211 324 +61 412 127 999 +61 414 734 557 PRADEEP DAVE GREG FIONA PHILIP RODGERS HASKINS O’KEEFE pphilip@deloitte.com.au drodgers@deloitte.com.au ghaskins@deloitte.com.au fiokeefe@deloitte.com.au +61 416 214 760 +61 410 541 678 +61 424 294 180 +61 3 9671 7317 © 2020 Deloitte Touche Tohmatsu
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