Major banks tell shareholders who will pay
The major banks have taken their campaign against the Government’s proposed banks levy to their shareholders with both Westpac and the Commonwealth Bank quantifying the expected balance sheet impacts.
The Commonwealth Bank’s letter estimated a cost of $315 million a year, while Westpac estimated the cost at $370 million.
What is more, the Westpac letter made it clear that the bank could not afford to “simply absorb a new tax”.
“The impact of higher costs ultimately flows through to customers, shareholders, suppliers, staff or some combination of all four,” it said.
“No decision has been made on how we respond to the levy,” the letter said. “However, to put this new tax in perspective, and give you a sense of the potential impact on your investment; if the first full year’s impact were borne just by Westpac’s shareholders, it would be equivalent to eight cents per share.”
The bank’s letter said that based on Westpac’s dividends in full year 2016 of 188 cents per share, this would represent 4.3 per cent of dividends paid.
The Commonwealth Bank letter also reinforced the impact on dividends, noting that it had consistently returned on average 75 per cent of profits as dividends.
Both banks pointed to their submissions to the Government on the issue, with Westpac particularly noting its belief that the new tax should include foreign banks to ensure Westpac is not competitively disadvantaged.
Recommended for you
The Reserve Bank of Australia (RBA) has lowered rates to a level not seen since mid-2023.
Financial Services Minister Stephen Jones has shared further details on the second tranche of the Delivering Better Financial Outcomes reforms including modernising best interests duty and reforming Statements of Advice.
The Federal Court has found a company director guilty of operating unregistered managed investment schemes and carrying on a financial services business without holding an AFSL.
The Governance Institute has said ASIC’s governance arrangements are no longer “fit for purpose” in a time when financial markets are quickly innovating and cyber crime becomes a threat.
