Tag: Coronavirus

APRA Drops Capital Requirements

The Australian Prudential Regulation Authority (APRA) today announced temporary changes to its expectations regarding bank capital ratios, to ensure banks are well positioned to continue to provide credit to the economy in the current challenging environment.

Over the past decade, the Australian banking system has built up substantial capital buffers. The highest quality form of capital, Common Equity Tier 1 (CET1) capital, reached $235 billion at the end of 2019. As a result, banks are typically maintaining capital levels well above minimum regulatory requirements.

In 2017, APRA set benchmark capital targets for banks to enable them to be regarded internationally as unquestionably strong (which was a recommendation of the 2014 Financial System Inquiry). These benchmarks are well above current minimum regulatory requirements. For the four major banks, for example, this benchmark equated to having a CET1 ratio of at least 10.5 per cent of risk-weighted assets. A lower benchmark applies for smaller banks. In comparison, the actual CET1 ratio of the banking system by the end of 2019 had reached 11.3 per cent.

APRA is advising all banks today that, given the prevailing circumstances, it envisages they may need to utilise some of their current large buffers to facilitate ongoing lending to the economy. This is especially the case for banks wishing to take advantage of new facilities announced today by the Reserve Bank of Australia to promote the continued flow of credit. Provided banks are able to demonstrate they can continue to meet their various minimum capital requirements, APRA would not be concerned if they were not meeting the additional benchmarks announced in 2016 during the period of disruption caused by COVID-19.

APRA Chair Wayne Byres said: “APRA has been pursuing a program to build up the financial strength of the system for many years, when banks had the capacity to do so. As a result, the Australian banking system is well-capitalised by both historical and international standards.

“APRA’s objective in building up this capital strength has been to ensure it is available to be drawn upon if needed in times such as this. Today’s announcement reflects the underlying strength of the system: even if the banking system utilises some of its current large buffers, it will still be operating comfortably above minimum regulatory requirements,” Mr Byres said.

Tasmania Isolates

From midnight, Friday 20 March, all non-essential travellers departing for Tasmania will be required to quarantine for 14 days, as announced today by Peter Gutwein, Premier. He said:

This is a tough, but necessary decision to flatten the curve, putting Tasmanians’ health and wellbeing first.

The quarantine period will not apply to essential travellers – such as health care workers, emergency workers, defence personnel, air and ship crew, specialists, and essential freight personnel (truck drivers/spirit freight), and there will be stringent guidelines to manage this.

Travel restrictions do not apply to Tasmanian residents on our islands, such as King and Flinders, flying into mainland Tasmania.  However they will apply to anyone travelling inbound to the island from mainland Australia including residents returning home to the island. Mainland Australians flying into our islands then onto mainland Tasmania will need to self- quarantine when they arrive.

All passengers will be screened on arrival and must demonstrate they meet the essential traveller criteria.

If they are deemed non-essential, they will be directed to quarantine themselves at their stated place of address.  Tasmania Police and Biosecurity Tasmania will ensure compliance with the quarantine measures, helping people to access support and follow up to ensure the process is adhered to.

Breaching the quarantine process may incur a penalty of up to $16,800.

The message is clear, and the penalties are severe for anyone who does not comply with the mandatory quarantine.

Freight will continue to come in and out of our state, and with TT-Line having capacity to carry extra freight, Tasmanians can be assured we will have the essential supplies we need.

Those requiring interstate medical treatment will also be able to utilise the Royal Flying Doctor’s Service.

There is nothing more important than Tasmanians’ safety, and while the economic impact will be significant, we have a chance now to slow the spread of COVID-19 in our state.

This will provide Tasmanians with more certainty, help us to recover more quickly and make our state safer.

Under a State of Emergency, we will activate the State Control Centre, which will be headed by the State Controller (Commissioner of Police, Darren Hine) in close liaison with the Director of Public Health, to coordinate whole-of-government responses to COVID-19.

As an island we are well placed to implement these tough restrictions and slowing the spread of coronavirus will ensure we are better placed to protect all Tasmanians.

Build More Ventilators

General Motors Co.’s Mary Barra offered to manufacture hospital ventilators in auto factories shuttered by the coronavirus outbreak, an effort that would echo Detroit’s contribution to Allied powers during World War II. Via Bloomberg.

GM’s chief executive officer floated the idea during a conversation with top White House economic adviser Larry Kudlow, he told reporters Wednesday. On Fox News earlier, he described an unidentified auto executive’s offer to call back workers to idled plants to make the medical devices needed to treat critically ill virus patients, and said it was made “on a voluntary basis for civic and patriotic reasons.”

Barra, 58, suggested ways the company could help during the crisis, a person familiar with the matter said. GM could use some of its excess factory space to build ventilators and has people looking into how that would be done, said the person, who asked not to be identified describing a private conversation.

After U.S. President Franklin D. Roosevelt called for arming and supporting Britain, France and other nations in 1940, Detroit’s auto industry quickly transitioned their car assembly lines over to make military jeeps, tanks and bombers. Within a year and a half after the 1941 attack on Pearl Harbor, 350,000 workers moved to the Motor City to join in the war effort, according to the Detroit Historical Society.

U.K. Prime Minister Boris Johnson earlier this week called on manufacturers to build ventilators. Carmakers Jaguar Land Rover Plc and Toyota Motor Corp. are among the companies that have offered to help.

ScoMo Tightens The Screws

In a press conference this morning, Prime Minister Scott Morrison upgraded the travel ban on Australians to level four for the entire world in the wake of the coronavirus outbreak. This is the first such ban in Australian history.

A human biosecurity emergency has been declared under the Biosecurity Act by the Governor-General.

“The travel advice to every Australian is do not travel abroad. Do not go overseas. That is very clear instruction,” he said. Domestic air travel though will not be cancelled as it is “low risk”.

Scott Morrison said the country will not go into lockdown during the COVID-19 pandemic, saying the situation will last at least six months.

Prime Minister Scott Morrison said non-essential indoor gatherings of persons more than 100 have been now banned.

The health advice is that schools should remain open, Morrison said.

However, to reduce the risk of transmission to aged care residents, visits will be limited to a short duration and will only allow a maximum of two visitors at one time per day.

He criticised (rightly) the panic buying chaos across the nation. ” Stop it. It is not sensible, it is not helpful and I have to say it is has been one of the most disappointing things I have seen in Australian behaviour in response to this crisis,” he said.

He flagged further economic measures will emerge soon with the government is considering further economic measures that will deal with the impact of the coronavirus on the Australian economy, particularly on small businesses and individuals.

Chief Medical Officer Brendan Murphy said there are about 450 cases of COVID-19 in Australia, with increasing numbers each day. There is only “limited community transmission”.

Australia has completed more than 80,000 tests, with additional supplies being secured.

“Further supplies are being secured and that includes having domestic solutions to the supply issues that relates to the supply issues that relates to the testing equipment.”

Let’s Throw Some Money About – The Property Imperative DAILY 12 March 2020

Given the current market gyrations, we are going to examine the latest critical data each day, because a week is a long time in politics but a lifetime on the markets at the moment…

UK Banks Offer Mortgage Repayment Holidays

Several UK mortgage lenders have announced loan repayment holidays to support homeowners affected by coronavirus. Via Homes and Property

Royal Bank of Scotland said it will defer mortgage payments for up to three months to affected borrowers.

The state-backed bank is 62 per cent owned by the taxpayer and has announced the emergency measures to support customers who might lose their jobs or see their income decline if they cannot work due to illness or lockdown.

A spokeswoman for RBS said: “We are monitoring the potential impact of coronavirus across all our customers to ensure we can support them appropriately through any period of disruption. We have a strong track record in working with our customers who are affected by disruption outside of their control.”

TSB also said borrowers could have mortgage repayment holidays for up to two months.

UK Finance said all its members were putting measures in place to support borrowers affected by the virus. Stephen Jones, the industry body’s chief executive said: “All providers are ready and able to offer support to their customers who are impacted directly or indirectly by COVID-19, which could include offering or increasing an overdraft or allowing repayment relief for loan or mortgage repayments: asking for help early is key.

“We would encourage customers who think they may be affected to contact their provider as soon as possible to discuss the support available to them.”

Miles Robinson, head of mortgages at online broker Trussle, said: “Self-employed and gig economy workers might be concerned about their income becoming more unstable, at least temporarily, which may affect their ability to pay the bills at the end of the month.

“The good news is that mortgage lenders don’t live under a rock. They know that coronavirus is causing severe uncertainty. They’re also aware that as a result of the outbreak, some customers might be unable to make their monthly mortgage repayments.”

UK lenders adopted similar measures in the 2009 recession.

US Cans European Flights

President Trump is suspending flights from Europe for the next 30 days because of the virus, a decision likely to ripple throughout the global economy. The president said such travel restrictions would apply to “trade and cargo,” but the White House later clarified that goods from Europe would still be able to enter the country. Via The Hill.

Trump said he will “soon be taking emergency action [to] provide financial relief … targeted for workers who are ill, quarantined, or caring for others due to coronavirus,” without specifying how he would do so.

The president also said he would instruct the Small Business Administration to extend low-interest loans to businesses in coronavirus hot spots to overcome steep declines in activity, and would ask Congress to approve a temporary payroll tax suspension that has fallen flat among lawmakers.

Trump also did not address a several issues that Democrats consider essential to any coronavirus aid plan, including provisions to expand unemployment insurance and ensure that low-income children don’t miss meals due to school closures. The House is set to vote on a bill with those measures and others, including federal paid sick leave, on Thursday in a bid to force the Senate to pass the legislation quickly.

More than 1,000 cases of coronavirus have now hit the U.S.

Earlier, President Trump insisted the U.S. is not suffering through a financial crisis in an Oval Office address to the country about the coronavirus outbreak on Wednesday. 

“This is not a financial crisis. This is just a temporary moment of time that we will overcome together as a nation,” Trump said. 

Dow Jones industrial average futures plunged after Trump’s address, projecting a loss of more than 800 points when markets open on Thursday. 

UK Spends Big In Budget About Face

The budget released overnight reads more like a Labor than Conservative strategy, with big spending on infrastructure – including in the UK’s north, as well as a significant spend on combating the virus.

Rishi Sunak delivered his first budget with both the tactical and strategic in mind. He focused first on the public health challenges of coronavirus but went on to “levelling up” across the country.

His virus emergency package totaled £30bn, included welfare and business support, sick-pay changes and local assistance. This includes £7bn for businesses and families and £5bn for the NHS. Statutory sick pay will be available to individuals self-isolating and self-employed or gig workers will be able to access support from Government more easily. The requirement to physically attend a job centre will be removed – everything can be done on the phone and online.

The chancellor announced £1bn of lending via a government-backed loan scheme, with government backing 80% of losses on bank lending and £2bn of sick-pay rebates for up to 2m small businesses with fewer than 250 employees.

He will also abolish business rates altogether for this year for retailers, in a tax cut worth more than £1bn. Any company eligible for small business rates relief will be allowed a £3,000 cash grant – a £2bn injection for 700,000 small businesses.

Beyond the virus, Sunak said the government is tripling its investment in transport and infrastructure spending to the highest levels since 1955. The government will provide additional funding worth £640m for Scotland, £360m for Wales and £210m for Northern Ireland.

The government will spend £27bn on more than 4,000 miles of roads. £5bn of funding will be invested in gigabit-capable broadband. An additional £1.5bn will be made available for further education funding.

Sunak said almost £1.1bn of allocations from the housing infrastructure fund will be made to build almost 70,000 homes in high-demand areas.

The chancellor announced a Grenfell building safety fund worth £1bn. The funds will help to remove cladding from tall residential buildings.

He said almost £650m of funding will be made available to help rough sleepers into accommodation.

Sunak said the government will increase NHS funding by £6bn during this parliament. Reiterating campaign pledges, he said the package will help to hire 50,000 nurses and build 40 hospitals. The chancellor announced the NHS surcharge for people from overseas will increase to £624.

As a result, the chancellor forecasted growth before the coronavirus hit of 1.1% in 2020, then 1.8%, 1.5%, then 1.3% and 1.4% in the following years. Already lower than expected in earlier forecasts. So growth has been downgraded BEFORE the virus impact.

UK Government borrowing as a percentage of GDP will be 2.1% this year then will rise to 2.4% in 2020-2021, 2.8% in 2021-22, then falls to 2.5%, 2.4% and 2.2% in the following years. Debt as a share of GDP is forecast to fall from 79.5% this year to 75.2% in 2024-25. UK Austerity is over.