Date: May 12 2012
The nation’s top banking watchdog warned it would scrutinise banks’ strategies to ensure they avoid taking on excessive risk as they adjust to the post-credit-boom economy.
Australian Prudential Regulation Authority chairman John Laker, in a speech in Melbourne yesterday, said the slowdown in borrowing would force banks to seek new ways to sustain profits, a trend that may lead to new types of risk-taking.
Consequently, APRA would examine banks’ cost-cutting, technological innovation and expansion into new markets.
‘‘Strategic ambitions will be crucial in determining how authorised deposit-taking institutions negotiate the slow lane and maintain their financial strength and profitability in a durable way,’’ he said, in a speech to the American Chamber of Commerce in Australia.
Australia’s major banks have shed hundreds of jobs this year, as the sector adjusts to weak demand for financial services, including the slowest growth in mortgages in 35 years.
While not ruling out the practice of staff outsourcing, Mr Laker said institutions ‘‘need to recognise that while outsourcing may reduce costs, it always reduces control - control over resourcing, timelines and communication.’’
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