Busted: Bankers and The Global Economy

May 1, 2008

Aussie Bank CEO Claims Worst is Over

Westpac is a multinational financial services company and the fourth largest bank in Australia. Westpac has come through the first six months of the global credit crunch with a 34 per cent rise in profit, prompting its new chief executive Gail Kelly to declare that the “worst is over”.

Kelly also warned that the banking industry’s global era of growth had ended, noting that slower loan expansion, increased bad debt charges, persistently higher funding costs and continued market volatility was in the immediate future.

New long-range strategic planning process is under way. “We want to encourage boldness, having a go, breaking down barriers and getting rid of some of the red tape,” the Westpac boss said.

In a move that seems consistent with the overall global shift in thinking, the banking emphasis is swinging away from head office thinking to empowering the local community concept that is closer to the customer. Banking is striving for a friendlier face in the public eye as it confronts a sober new era.

Write-off of bad debt is still in the foreseeable future future, but some banks in Australia have seen the worst and are seeing profitability. According to the Aussie banker, her bank won’t be returning to their old ways. If you are a foreign banker, this is good news and new hope for commercial banking.

At the core of the mortgage and banking debacle and at the scene of the crime, the United States still has a long way to go.


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