Speaking this morning at a Senate Economics Legislation Committee hearing into the major bank levy, the chief financial officers of the big four banks plus Michelle Jablko, the CFO of the Australia and New Zealand Banking Group (ANZ), said the institutions were “disappointed” and “concerned” by the short notice at which the banks were told of the levy (reportedly around 40 hours before the announcement was made), but “accept that it will become law”.
Ms Jablko said that the bank hoped to “work constructively to ensure that the legislation is as fair and efficient as possible” but all of the affected banks speaking at the hearing had three points to make in relation to its submission.
The first point related to the wish that the levy should cease when the budget returns to surplus, the second centred on bringing foreign banks operating in Australia under the levy (and excluding the offshore branches of Australian banks), and the third concerned the combined and “unintended” impacts of increased bank regulation and the levy.
Ms Jablko said: “Before I close and to anticipate your questions, we have not decided how we will respond to the levy. In any event, there are legal limitations to what I can say today. However, we cannot ‘absorb’ the levy... It is an additional cost that the shareholders, customers and employees of ANZ will bear.
She added: “Our options are to reduce what our owners receive, reduce our costs or charge higher prices."
Ms Jablko continued: “We’ve not made any decision, but if you look at any cost in the business and this is a cost of doing business, it needs to impact one or more of those groups. But we’ve not made any decisions…
“The levy is not in, we need to look at the way things sit when we incur it… It depends on market conditions and a number of other questions.”
Speaking for NAB, Gary Lennon also emphasised: “It has been repeatedly been stated that the tax can simply be absorbed by the banks. No cost, such as a tax, can be absorbed by any business. it must be passed on… No decision has been made on how NAB will manage these additional costs, but the costs will be borne by one or more of these groups: our customers, borrowers and savers; our shareholders; our suppliers; and our employees.”
When asked by the committee whether the banks had been “getting together” in a bid to “having a common approach” to the bank levy, Mr Lennon emphasised that his statement was prepared by himself, but said that it's “not surprising the [major banks] have come up with similar issues, given that we are faced with similar issues”.
“It would be somewhat surprising if we did not raise similar issues,” he said.
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Annie Kane is the editor of The Adviser and Mortgage Business.
As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts.