country for nothing. However, even Down Under is beginning to feel
the effects of the credit crunch.
It is now clear that Australian financiers are concerned about
the turmoil in the world of finance, with many organisations
hunkering down through preserving capital and lending to the best
customers. Lending criteria is also tightening significantly
following a number of high-profile bankruptcies in the Australian
market.
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However, the overall market is in much better shape than the UK
or the US, largely thanks to the recent boom in commodities which
has driven Australian growth for the past decade.
The concern now is whether China can avoid a downturn. China is
by far the largest single market for Australian commodities (40
percent plus), and much attention was paid to the fiscal stimulus
the Chinese government recently committed to delivering this year
and next.
The consensus view is that Australia will experience a downturn,
although one that is probably less severe than the one in Europe
thanks to its abundant natural resources, its diversified economy
and the likely continuing demand from China.
The big four Australian banks and finance companies (National
Australia Bank, Westpac, ANZ Banking and Commonwealth Bank of
Australia) are all strong institutions with significant capital
reserves.
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By GlobalDataHowever, everyone is closely watching developments in the UK and
US. There have been a number of impacts locally, such as the sale
of Bankwest, a subsidiary of HBOS, to Commonwealth Bank, which have
been driven by changes in the banking world elsewhere.
One result of these changes is the continuing consolidation of
finance into the hands of the ‘big four’. This was cause for
concern as it clearly has serious negative implications for the
availability and diversity of finance offerings.
There is also a move away from local state regulation of the
finance industry towards central federal regulation.
This is expected to make business far more straightforward, with
one set of regulations governing the entire Australian market,
rather than the current state-by-state patchwork.
This will also result in better access to data and improved
prevention and control of fraud with a centralised registration of
charges/ownership of assets in the process of being
established.
The clear message is that the downturn is a global phenomenon,
and that no country is able to completely avoid its
consequences.
However, some, like Australia, might prove to be better
positioned to reduce its length and severity.
Alun Richards, a Principal of The Alta
Group, Advisors to the Equipment Finance Industry
