Banks facing dramatically changed landscape
The newly merged Bendigo and Adelaide Bank is considering raising further funds via the issue of convertible preference shares to finance growth and to replace subordinated debt in circumstances where its chairman Robert Johanson has pointed to banks adopting tougher standards in future.
Johanson has used his address to the bank’s annual general meeting to describe current conditions as “very difficult and dangerous” and requiring that the bank focuses on the principles that had stood it in good stead through similar difficulties in the past.
He said he expected the banking system would survive, but in a profoundly different form with activity based on financial engineering reduced while banks would hold more of the assets and liabilities of the community on their balance sheets.
“Credit will not grow at the unsustainable rates that the system had become used to over the past decade,” Johanson said. “Banks will be better capitalised.”
AUTHOR
Mike Taylor
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