Stern sermons and looser rules won’t get bankslending more
Why won’t those wretched banks lend money? That is aquestion many European and American politicians have asked inrecent months.
For as the global economy ails, there is growing anxiety about the seeming failure of banks tosupport growth. So much so, in fact, that this week my Financial Times colleagues reported thatBritish regulators are now quietly loosening some bank rules to encourage more loans – particularlyto small businesses, and other seemingly “worthy” borrowers.
But as the political frustration bubbles, it is instructive to take a look at a presentation about bankbehaviour recently made by Phil Coffey, the chief financial officer of Westpac, to Australianregulators and financiers.
但在政界的失望情绪日益高涨之时，我们却应当去看看西太平洋银行(Westpac)首席财务官菲尔 科菲(Phil Coffey)近期所做的一个讲演。这个讲演的主题是银行行为，听众是澳大利亚的监管人士和金融家。
For while Mr Coffey’s vision is primarily shaped by the Antipodean market, his comments apply toEurope and the US too; indeed, the only difference is that Mr Coffey’s location leaves him speakingwith a sense of clarity and honesty that is (sadly) all too rare in the politically-charged arena of theCity or Wall Street.
So what, in Mr Coffey’s view, is the reason why those banks will not make more loans? He citesthree key points. The first issue (which is often underplayed) is a change in the behaviour of bankcustomers.
Most notably, as I have noted in previous columns, consumers and companies are currently in adeleveraging mindset. Hence 41 per cent of Australians want to put their spare cash into a bankdeposit, up from 28 per cent five years ago, and 23 per cent want to pay down debt, double theratio five years ago.
And “like households, firms have tended to behave cautiously, prudently consolidating theirbalance sheets, limiting debt and growing their holdings of low-risk assets,” Mr Coffey says.
Little wonder, then, that Australian bank deposits are an eye-popping 54 per cent up from late 2007.
Secondly – and more obvious – banks are being affected by a deluge of regulatory reform. Nevermind those Basel Capital rules that financiers keep complaining about; subtle reforms on, say, liquidity coverage ratios are also biting hard.
This makes banks far more conservative about lending money and fearful about how they managetheir balance sheets. In particular, chief financial officers are desperate to hang on to their swellingdeposits, by cultivating long term relationships and paying more to depositors.
Then there is a third, less-recognised – but equally crucial – issue: funding.
Before 2007, CFOs presumed that they could always meet rising credit demand from theircustomers by tapping wholesale markets. The dominant cultural vision of credit, as a socialanthropologist might say, was an elastic thing. But during the financial crisis, wholesale marketssuddenly closed, cutting off that source of credit for banks and prompting groups such as “Northern Rock, HBOS, Dexia, Countrywide, Washington Mutual and so on” to collapse.
2007年前，首席财务官们认为，他们总是能够借助批发市场来满足客户不断增长的信用需求。社会人类学家或许会说，主流文化观点认为，信用是有弹性的。但在金融危机期间，批发市场突然关闭，切断了银行的信用来源，并造成“北岩银行(Northern Rock)、苏格兰哈里法克斯银行(HBOS)、德克夏银行(Dexia)、美国国家金融服务公司(Countrywide)、华盛顿互惠银行(Washington Mutual)等”金融集团的崩溃。
That sparked a cognitive shift: suddenly credit was no longer viewed as a bottomless pit butbecame a finite commodity which needed to be rationed.
Or, as Mr Coffey says, the days of “tapping endless wholesale funding to meet all comers arebehind us”. And while central banks have tried to replace those wholesale markets, few CFOs trustthat this central bank money will always be there.
That has not just affected recent behaviour but could curb loans in the future, too. Most notably, if there is more demand from customers for credit in future times, banks are likely to ration thatcredit by raising the price.