Aussie banks exposed to sub-prime crisis
Fairfax Media | Thursday, 10 January 2008
Australia's biggest four retail banks, which own New Zealand's top five banks, have a A$850 million (NZ$972 million) direct exposure to the troubled United States sub-prime mortgage market, The Australian newspaper reported today.
The Commonwealth Bank of Australia, National Australia Bank, ANZ Group and Westpac's exposure comes through investments in troubled US mortgage group Countrywide Financial. Commonwealth Bank owns ASB, National Australia owns the Bank of New Zealand, ANZ Group is the parent of both New Zealand's ANZ and National Bank and Westpac the parent of Westpac New Zealand.
The Australian banks were part of a syndicate of 40 international banks that provided Countrywide an $US11.5 billion (NZ$14.8 billion) lifeline last year.
According to The Australian, Commonwealth Bank and National Australia invested A$300 million each, while the ANZ pumped in A$150 million and Westpac $100 million.
Their exposure to the sub-prime crisis through Countrywide was confirmed by the Australian banks yesterday, the newspaper reported.
Shares in Countrywide, the US's largest independent mortgage lender, fell 17 per cent on Tuesday after speculation, which it denied, that the company would seek bankruptcy protection.
The speculation around Countrywide comes against a backdrop of defaults on sub-prime mortgages, or loans to borrowers with poor credit histories, from global banking giants such as Citigroup, UBS and HSBC so far producing about US$80 billion (NZ$104 billion) in losses on securities backed by them.
Fairfax Media | Thursday, 10 January 2008
Australia's biggest four retail banks, which own New Zealand's top five banks, have a A$850 million (NZ$972 million) direct exposure to the troubled United States sub-prime mortgage market, The Australian newspaper reported today.
The Commonwealth Bank of Australia, National Australia Bank, ANZ Group and Westpac's exposure comes through investments in troubled US mortgage group Countrywide Financial. Commonwealth Bank owns ASB, National Australia owns the Bank of New Zealand, ANZ Group is the parent of both New Zealand's ANZ and National Bank and Westpac the parent of Westpac New Zealand.
The Australian banks were part of a syndicate of 40 international banks that provided Countrywide an $US11.5 billion (NZ$14.8 billion) lifeline last year.
According to The Australian, Commonwealth Bank and National Australia invested A$300 million each, while the ANZ pumped in A$150 million and Westpac $100 million.
Their exposure to the sub-prime crisis through Countrywide was confirmed by the Australian banks yesterday, the newspaper reported.
Shares in Countrywide, the US's largest independent mortgage lender, fell 17 per cent on Tuesday after speculation, which it denied, that the company would seek bankruptcy protection.
The speculation around Countrywide comes against a backdrop of defaults on sub-prime mortgages, or loans to borrowers with poor credit histories, from global banking giants such as Citigroup, UBS and HSBC so far producing about US$80 billion (NZ$104 billion) in losses on securities backed by them.
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