Govt's big bank levy passed by parliament

Govt's big bank levy passed by parliament

Australia's largest banks have been dealt a serious double blow.

The credit rating agency Moody's downgraded Australia's Big Four banks.

Commonwealth Bank of Australia, National Australia Bank Ltd. and Westpac Banking Corp. were all downgraded to Aa3 from Aa2, Bloomberg reports, citing a statement from Moody's released on Monday.

The Australian government has taken steps in recent months to cool the red-hot property market amid concerns that speculation in housing could ultimately hurt consumers, banks and the economy.

"They (Moody's) are certainly concerned about housing risk in Australia", Tripe said. "Sooner or later, booms have got to stop", he said.

Bell Potter analyst TS Lim said the government's introduction of a new 6 basis points tax on certain liabilities to help return the budget to a surplus made it appear even more likely that the banks would be bailed out in the event of a crisis.

Al Azhar condemns van attack on London Muslims
Frank reports that Muna Mohamed said one of her relatives suffered a broken back in Monday's attack and is in critical condition. Police said a suspect was quickly and calmly turned over to the police, and that no one else was found in the van.

The downgrade suggests bank funding will be slightly more expensive when raising money overseas, a factor that has forced higher independent interest rate increases in the past. Bank shares opened flat on Tuesday in line with the broader market.

Crossbench senator Nick Xenophon tried, but failed, to amend the legislation to ensure the levy would apply to foreign banks with significant assets such as HSBC or BNP Paribas, arguing the levy unfairly disadvantaged Australian banks.

Over 60 per cent of the Australian banking system's loan book is in residential property, almost 20 percentage points more than second-placed Norway and more than double the US ratio, according to data from the International Monetary Fund.

The New Zealand proportion of lending in residential property is estimated to be about 56 per cent. "There is an indication of some panic about this rating change, but it's based on a collapse in Australian house prices which has not yet occurred".

Twenty-three institutions, including AMP, Bank of Queensland, Bendigo and Adelaide Bank and Credit Union Australia, received downgrades to their stand-alone credit profiles from S&P.

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