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  • 🏦 Bank of Queensland Proposes 400 Job Cuts Amid Restructuring Efforts

🏦 Bank of Queensland Proposes 400 Job Cuts Amid Restructuring Efforts

Author

Miko Santos
August 21, 2024

Good Morning. Miko here! Welcome to Bada Embankment! We've got some big news today. First, we're sad to say that layoffs have occurred at BOQ. However, we're also excited to see Kiwibank taking on the role of potential disruptor in personal banking in New Zealand!

Please support us and spread the word to your family and friends about our newsletter. As always, contact us via email and don't forget to sign up for this newsletter here if you haven't already!

Today’s reading time is 6 minutes. - Miko Santos

👇 Santos Unfiltered is a podcast that uses the best journalism to find the answers to the biggest questions.

SANTOS

🛎️ AFTER THE BELL

market

Data is provided by Market Index AU. Stock data as of market close

📈 MARKET WATCHLIST

Data is provided by Market Index AU. Stock data as of market close

🥝 KIWIBANK
Kiwibank's Role as a Potential Disruptor in Personal Banking

kiwibank

Image: Kiwibank fb page

The final report of the Commerce Commission into competition in New Zealand's personal banking sector has highlighted that a stronger Kiwibank and the concept of open banking could be game-changers for Kiwi consumers by increasing competition and offering more choice.

The Revelations:

  • The Commission recommends a raft of regulatory and structural changes to drive more competition for the benefit of Kiwi consumers following a 14-month market study. Researchers from this study found a very stable, very profitable, two-tier oligopoly without a disruptive maverick and with a lack of obvious or aggressive price competition.

  • Competition isn't working as well as it should in personal banking, says Commission Chair John Small. "With almost every New Zealand household having a bank account and debit card, and with a substantial $340 billion residential mortgage market, we need to be taking an integrated approach to make improvements in this market," says Small.

  • It is supportive to new entrants and is reducing regulatory barriers, empowering consumers with better prices and services. Open banking has the potential to transform consumer choice by giving financial services access to underserved Kiwis. Dr. Small does, however, support progressive regulation focused on competition as a way to balance the need for financial stability against the need for competitiveness in reducing the entry barriers to the personal banking sector and obstacles to its expansion.

  • It has brought forward four recommendations to underpin the systemic issues in banking, such as access to basic bank accounts and surmounting the lending barriers to housing on Māori freehold land. These include capitalization of Kiwibank; acceleration of progress on open banking; assurance of a better regulatory setting for competition; and the empowerment of consumers. More specifically, the government should be an early adopter and have an All-of-Government approach to the adoption of open banking functionality.

Why it matters:

Open banking will increase the competitiveness and innovation in the banking sector, hence reduce costs and improve services offered to clients. A more dynamic and customer-oriented financial sector can also be achieved by ensuring that all providers of services work on equal competitive ground.

Bottom line :

The government should foster a more competitive and innovative banking system, where fair competition and innovation are really encouraged, so that everybody gets better access to financial products at lower costs and with improved services.

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🌋BIG PICTURE

🚨 BIG FOUR
NAB, CBA, and Bank Australia Back FPACA's Signature Care Acquisition

NAB, CBA, and Bank Australia have provided more than $260 million debt facilities to For Purpose Investment Partners, a leading impact investment manager, toward the acquisition of Signature Care. 

The Deals 

  • A $260m debt facility provided by NAB, CBA, and Bank Australia, for the acquisition of Signature Care, will support the expansion of age care facilities within the country.

  • It has eight operational residential care facilities with a pipeline of six development sites and plans for further growth.   

  • The transaction includes $35 million social loan notes provided by Qantas Super and Australian Ethical Investment.   

Who is FPACA?

The core focus of the FPACA non-profit aged care platform will be resident health and staff retention. Signature Care and Luson Aged Care establish a top-15 Australian aged care provider with more than 2500 beds. Qantas Super and Australian Ethical Investment's commitment in April 2024 was followed by commitments from NAB, CBA, and Bank Australia.   Avalon Requirements Evaluated

Why it matters:

This additional financial investment in their health care not only ensures better quality care for aging Australians but also more strongly aligns to our core values of social responsibility, thus ensuring a holistic approach toward community support. We are tangibly making a difference in the improvement of the quality of life of older people by directly investing in facilities providing help and care required by them.

Bottom Line:

Increasing the number of care facilities within Australia would imply delivering good and nurturing service to the older populace of Australia, while simultaneously also serving the the aim of core values regarding social responsibility. By providing funding against necessary facilities that would help the weaker sections of society, FPACA is contributing massively towards enriching the lives of older people and is deeply committed to their welfare.

🌏GLOBAL MARKETS

WORLD MAP

  1. Commonwealth Bank to Lease 8 Lakh Square Feet in Bengaluru Office Park. Embassy Office Parks REIT will lease 8 lakh square feet of grade-A office space in Bengaluru to Commonwealth Bank of Australia, with an option to expand by another 6 lakh square feet.

  2. In an unexpected move, Sweden's Riksbank lowered its policy rate overnight. The Executive Board voted to slice 25 basis points off the policy rate to 3.5%. This was the second rate cut by the Riksbank, the first coming in May from the 4% peak. The rate outlook guidance was also revised by the Board, which pointed to a dovish shift and two to three more cuts this year. - source Bloomberg.

  3. Two research papers by the Bank of Japan suggest that while there is yet another case to be made for another interest rate hike, there is still lingering inflationary pressure in the economy. (Bloomberg).

  4. Global yields fell. 2-10 year US Treasury yields fell 3-6bps, with the short-end down the most 2Y 3.92%, 10Y 3.79%. More than 30bps of Fed rate cuts are expected in September and 100bps by year-end. European government bond yields fell across yield curves UK10Y 3.89%, Ger10Y 2.19%. Current futures pricing has at least 25bp cuts priced into the next meeting for the US, NZ, Canada, Eurozone, Switzerland, and Sweden. It is not until November that the first UK cut comes, and not until December for the RBA.

  5. Investors Await Bank of Korea's Rate Decision Amid U.S. Data Revisions. Attention of Asian investors this week will be riveted to the interest rate decision and guidance of the Bank of Korea on Thursday, after revised U.S. jobs data and Fed minutes released on Wednesday boosted hopes of aggressive rate cuts.

🈺 BUSINESS
CBA and BNY Mellon Team Up to Speed Up Cross-Border Payments

The Commonwealth Bank of Australia has teamed up with The Bank of New York Mellon to really shift gears on cross-border payments in Australia.

The Details:

 

  • Australian businesses and individuals are now empowered to receive real-time international payments from clients of the BNY through this relationship, in as little as 60 seconds—regardless of who they bank with.

  • The partnership will utilize Australia's New Payments Platform (NPP2) International Payments Service to enable CBA to process the final leg of BNY's cross-border payments through the NPP. This will provide clients with direct cost transparency, enhanced security features, and faster settlement processes.

  • CBA and BNY are partnering on the IPS initiative, which lies at the heart of evolving global payment speed for cross-border flows into Australia. This will enable overseas banking partners to accelerate the payment settlement of accounts in Australia and deliver better customer outcomes.

The NPP

In 2018, there was an introduction of the National Payment Platform in making instant payments between financial institutions. This brings efficiency and speed to yet another level. This supports the goal of the Financial Stability Board for a more and more connected global financial system, ensuring safety in the shift to almost real-time settlement.

Why it matters:

This partnership will benefit customers directly by gaining access to quicker and more secure cross-border payment choices. CBA and BNY, together, are utilizing the NPP2 IPS for better effectiveness and transparency of international transactions, finally enhancing the banking experience for their clients as a whole.

Bottom line:

This deal will increase the speed of making overseas payments for Australian customers, hence decreasing delays and increasing customer satisfaction. CBA and BNY are shifting the benchmark of cross-border banking transactions to the most updated infrastructure and technological standards.

🈺 BOQ
Bank of Queensland Proposes 400 Job Cuts Amid Restructuring Efforts  

Image: BOQ

 

The Bank of Queensland has announced 400 job cuts and told the ASX it is working on creating a "simpler specialist bank".

The Details:

  • The company streamlined its operating model as it evolved. Simplification and de-fitification of strategic pillars shall see a reduction of 400 FTEs and enhance productivity. This shall run until September 5.

  • These decisions affect team members, and to that, the group agrees. BOQ is helping the affected parties find redundancies or redeployment.

  • A restructuring charge of $25–35 million after taxes is expected, which will impact the F24 statutory nett profit after taxes.

  • Together with the $200m in coast savings by FY26 that BOQ had previously stated as a simplification target, this initiative will deliver annualised savings of approximately $50m.

What Finance Sector Union says:

The bank's plans for job losses by the Bank of Queensland—BOQ—and sprung on workers yesterday are not only disrespectful, but it will have implications for customers and the service they get from the bank.

BOQ management told the Finance Sector Union yesterday that all bank divisions would suffer a 400 role reduction. These are in addition to the 250 job losses that have already been axed in the past 12 months. It brings the total number of job losses at BOQ to 650.

There has been a consultation period that was suggested to be two weeks with the union by management, which is not enough for such a big change.

Why it matters:

BOQ suddenly announced job cuts with less-than-adequate union consultation; workers' livelihoods, jobs in question. Reduced staff numbers will also lead to disruption in quality service delivery to customers.

Bottom line:

BOQ also has to take care of its workforce and make sure that redundancies are done in as open and careful a manner as possible. Enough union consultation can lessen the impact of redundancy upon the workers and the clients.

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