Westpac is under pressure to increase interest rates on customers, chief executive Gail Kelly has reportedly told a private shareholders briefing.
According to The Age, Kelly also said pressure from Canberra could also make it more difficult for the bank to increase rates during the Federal Election period.
She said reliance on overseas funding will see costs rise by between 30-40 basis points from current rates, and that raising rates for mortgage holders will be difficult.
Westpac was criticised in December last year for raising its rates by 45 basis points, above the 25-point-rise announced just previously by the Reserve Bank of Australia. It blamed higher funding costs.
However, a spokesperson has said the bank will not comment on the remarks, saying they were made within a private meeting.
Arrow to support takeover offer
Meanwhile Arrow Energy’s biggest shareholder, New Hope Corporation, has said it would support a takeover offer from Royal Dutch Shell and PetroChina that is worth over $3.1 billion.
“In the absence of a superior proposal, New Hope supports the proposed transactions and intends to vote in favour of the demerger scheme and acquisition scheme for all the shares it owns or controls,” New Hope said in its results statement. The group holds a 16.7% stake in Arrow.
It comes after Arrow agreed to sell its gas assets to the Royal Dutch Shell and PetroChina for $3.4 billion, well above the previous March 8 proposal of $4.45 a share.
New Hope also announced a 93.9% decrease in profit after tax to just $111.6 million, after recording $1.82 billion during the first half of 2009. The company said these results were impacted by lower export coal prices.
Clash over health reforms
It’s on. Prime minister Kevin Rudd and Opposition leader Tony Abbott are set to clash today in a nationally televised debate on the upcoming health reforms.
But both leaders are not expected to reveal any major new policy initiatives during the debate. Rudd has said the debate will mainly be about health care, accusing Abbott of taking $1 billion from the health department when he was serving as minister.
“Mr Abbott has two challenges – explain why he took $1 billion out of the public hospital system and… (explain) his plan and how will he fund it for the future,” Rudd has told reporters.
“How can you trust a man who three years ago promised to develop a new plan for Australia’s health and hospital system, and three years later, has failed to deliver even on that.”
Shares higher after Wall Street rally
The Australian sharemarket has opened higher today after Wall Street stocks hit 17-month highs following the Congressional approval of health care reform.
The benchmark S&P/ASX200 index was up 38 points or 0.8% to 4869 at 11.55 AEST, while the Australian dollar also rose slightly higher to US91c.
ANZ gained 1.6% to $25.09, while Commonwealth Bank shares gained 0.9% to $56.26. NAB rose 1.5% to $27.10, as Westpac rose 1.2% to $27.44.
Rio Tinto chief executive Tom Albanese has said the company remains committed to strengthening ties with China despite the trial underway of four of its employees, including Australian citizen Stern Hu, all accused of stealing secrets.
“This issue is obviously of great concern to us, as it would be for any company operating in China. I can only say we respectfully await the outcome of the Chinese legal process,” Albanese told the China Development Forum in Beijing.
He also addressed the company’s relationship with Chinalco, saying that the firm is working to resolve differences and is confident about Chinese cooperation. Rio Tinto previously walked away from an investment from the company.
“Our relationship with Chinalco is important to us, the company supported us when it took up its full entitlement of shares in our rights issue last year to maintain its 9% stake in Rio Tinto,” he said.
“Our intention to form a joint venture confirms that Chinalco and Rio Tinto share a continued confidence in the long-term prospects of the mining industry and the Chinese economy.”
Albanese criticises Queensland Rail float
Meanwhile, federal infrastructure minister Anthony Albanese has said the plan to float Queensland Rail’s coal business as a single entity has some concerns.
“We need to look very carefully at the lessons of Telstra and other entities where you’ve had vertical integration,” Albanese told the ABC. “The Queensland government has to make those decisions based upon a full analysis of the facts and they’ll make those decisions.”
However, Queensland premier Anna Bligh has hit back at criticisms, saying that “running a business like Telstra is extraordinarily different to running a coal transport company”.
“Telstra provides a service into every household and every home and the bargaining power of a pensioner up against Telstra is a very different thing than the bargaining power of a Rio Tinto or a BHP with a transport company to get their coal to market.”
In the US, stocks which rose after months of uncertainty were wiped away with the passing of health care reform in the House of Representatives. The Dow Jones industrial average rose 43.76 points, or 0.41%, to end at 10,785.74.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
Comments