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Australia braces for banking rap-sheet in powerful Royal Commission report
[SYDNEY] Australia is bracing on Friday for the release of a powerful report into its scandal-hit financial sector, which could recommend legislative changes that affect how some the country's oldest financial institutions operate.
The scheduled release of the interim report comes after several months of revelations that has eroded share prices in the sector and prompted several high-profile resignations.
Prime Minister Scott Morrison told reporters on Friday the government would extend the inquiry if requested by former judge Kenneth Hayne, who is leading the year-long Royal Commission.
"Having commissioned the work, we will be looking carefully at what commissioner Hayne is observing at this point," Mr Morrison told reporters in Sydney.
"If he asked for an extension, then he would get one."
Mr Hayne has received over 9,000 submissions of alleged bad behaviour by banks, pension funds, financial advisers and insurance companies. The public inquiry has not reviewed every case of misconduct; instead it selected a number of cases to exemplify the problems.
The interim report will be superseded by a final report to be tabled in February that could recommend major regulatory reform for banks, financial advisers, pension funds and insurers, as well as civil and criminal prosecutions.
"We expect the commissioner to target culture, conduct and remediation process," banking analysts at Macquarie wrote in a note to clients on Friday.
Bank shares were trading slightly lower on Friday morning, with shares in Westpac, the second-largest lender, dropping almost 1 per cent after it revealed on Thursday that cash earnings would fall by A$235 million (S$231.8 million) due to customer refunds and provisions for litigation.
Since its first public hearing in February, the inquiry has exposed a litany of bad behaviour by all four big banks dominating the mortgage market, including Westpac, Commonwealth Bank of Australia, Australia and New Zealand Banking Group and National Australia Bank.
Listed wealth manager AMP Ltd has been the worst hit by the revelations. The company lost its CEO, half its board and billions in market value over accusations it charged customers fees for no service and then worked at the board level to deceive a regulator about it.
During the first four rounds of hearings scrutinising the lending and financial advice sectors, the market values of the four largest banks alone lost over A$50 billion, a string of damaging revelations hurt their reputations and raised the prospect of losses from lawsuits and remediation.