Banks paying more to borrow money - Ralph Norris
Article Category: Loans & Lenders
By By Ben Butler, From: Herald Sun,, 29 April 2010
BANKS are paying more to borrow money and the trend will continue, says Commonwealth Bank chief executive Ralph Norris.
While it is now easier for banks to borrow than it was at the height of the financial crisis, the days of cheap wholesale funding are gone, Mr Norris said.
"All of the banks have a significant portfolio of debt that has been borrowed at lower rates, prior to the start of the crisis, which has continued to roll over at higher rates," he told an American Chamber of Commerce lunch in Sydney.
"And what that means is that the average cost of debt that the banks have on their balance sheet continues to rise."
He said that before the crisis, banks had been able to borrow money at between 13 and 15 basis points above the swap rate.
"I don't think we're going to get back to those levels any time soon," Mr Norris said.
He said that while Australian banks had performed better than their US or European counterparts, with the big four banks all among only eight in the world that have AA ratings, the local industry "hasn't been immune to the crisis".
"However, it is widely recognised that we, as an industry, have weathered the worst of it and maintained one of the strongest banking industries in the world," he said.