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By: Staff Reporter
The debt crisis in Greece could increase borrowing costs for Australia’s banks.
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While the global financial crisis forced Australia’s banks to reduce their dependence on international market for financing, some 40 per cent of their funding requirements are still sourced from global markets.
KPMG financial services partner Andrew Dickinson said while the banks remain fairly comfortable where they are in their funding programs, the debt exposure in countries such as Greece, Portugal and Spain means any escalation of the crisis could negatively impact Australia’s financial sector.
“While Australian banks have improved their funding mix and liquidity since late 2007, they still rely on off shore wholesale funding,” Morgan Stanley analyst Richard Wiles told The Australian Financial Review.
“As such, we will still see higher funding costs as a source of downside risk.”
According to Mr Wiles, of all the majors Westpac is the most vulnerable to higher borrowing costs because it has larger financing needs.
