Skilton flays at wrong targets

Some direct, but nevertheless misdirected, criticism by Suncorp's acting CEO Chris Skilton at an investor briefing highlights the weakness in the positioning of his, and other, regional banks.

When asked about Samuel's recent comments about banking competition, Skilton said the gap in the cost of funding between the AA-rated majors and the A-rated regional banks meant that regionals could no longer occupy the middle ground.

Skilton said the securitisation market was effectively dead and this meant that an avenue for recycling balance sheet assets had been closed. “They (the regional banks) are going to have to rely much more upon a greater level of deposit funding where we are all paying the same rates,” Skilton said.

He said the regional banks will not be able to be competitive with the majors because of the difference in the cost of wholesale funding.

One target was the Australian Competition and Consumer Commission. “If Graeme Samuel thinks that the regional banks are going to keep the big bastards honest then I think he has got to rethink that, quite frankly,” he said. “It's a bit like the corner grocery shop is going to keep Woolworths honest in terms of pricing power. I hear the comments but I don't exactly understand the logic or analysis that sits behind it.”

Source: The Sheet