Five years of Federal Government financial assistance for small banks and non-bank lenders is drawing to a close.
The Australian and the
Financial Review today preview a speech by the Treasurer, Wayne Swan, in which he will will announce the end of the program of investment in mortgage-backed securities through the Australian Office of Financial Management.
The AOFM has invested A$14.5 billion in RMBS since late 2008. It last invested in a transaction in August 2012 for Suncorp.
On five occasions in the second half of last year the AOFM agreed to be an investor but made no investment due to adequate demand from others.
"Smaller lenders have been comfortably issuing RMBS at economic cost without AOFM support, despite its willingness to invest. They've raised $3.9bn this year on their own," the newspapers report that Swan will say.
Liberty Financial is the latest non-bank to market an RMBS deal, launched yesterday.
Swan will also use the speech to speculate that the Liberal and National coalition will use its planned inquiry into financial services to steer through mergers between one or more of the big four banks. This at present is banned under the long-standing four pillars policy.
"You have to wonder at the motives of those calling for yet another financial system inquiry," Mr Swan will say.
"Do they carry the baton of those who in 2008 urged me to weaken stability and competition by abolishing the four pillars policy? I wonder."
He will also say "What isn't widely known is that there was growing pressure in the winter of 2008 to see an end to the four pillars policy."