Banks planning to indulge over TFF finale

Ian Rogers

With lending to business headed in the wrong direction, Westpac may be hard placed to optimise its use of the Term Funding Facility – to which all banks lose access in eight weeks’ time.

“We’ve got a bit more to go on the TFF and we would look to draw that down over time,” Michael Rowland, the bank’s chief financial officer told an investor briefing yesterday.

At the end of March 2021, Westpac was fully drawn on its A$18 billion initial allowance under the TFF, a three-year funding facility from the Reserve Bank put in place 14 months ago.

The bank has used $4 billion of its $12 billion supplementary allowance, the bank said.

“Nine weeks remain for $92.7 billion to be drawn as the TFF program ends on 30 June 2021,” Peter Sheahan, director, money markets wrote in an assessment of the program on Friday.

“A run rate of greater than $10 billion per week shows a tsunami of liquidity approaches.”

Across the industry, additional allowances for SME and the allowance for Large Business Lending increased in the RBA’s monthly snapshot on this element of TFF allowances in early April. The RBA will update this on Friday.

APRA’s data on Westpac’s lending for business shows Westpac’s footings declined each month since the introduction of the TFF, save for a modest uplift in March 2021.

The bank said it experienced a $1.2 billion reduction in business lending over the last six months.