CBA chief says banks will pass on more costs

The head of the Commonwealth Bank has warned that interest rates are likely to remain high for the rest of this year and lenders will continue to pass the increased cost of funding loans to their customers. Chief executive Ralph Norris said that while the major Australian banks don't have any direct exposure to subprime mortgages, the effects of the problems in the US has led to an increase in the cost of funding in global debt markets. “I visited the US a couple of weeks ago and saw the depth of the problems and certainly those problems are much more entrenched than I thought,” he said. He went on to say that he now expects the global illiquidity crisis to continue for another 12 months or even longer before the markets return to some form of equilibrium.

Source: The Daily Telegraph