Tag: NAB

NAB’s Advantedge Offers New Mortgages

The white label sector of the mortgage market has been growing in recent times, and given the changes in pricing, and underwriting standards is one to watch. This is underscored by today’s news that Advantedge Financial Services has launched two variable rate special offers for new owner occupier and residential investor principal and interest loans as well as a simpler pricing structure for these products.

Advantedge is part of the National Australia Bank Group (NAB) and is a wholesale funder and distributor of white-label home loans.  

They say white label loans are an alternative to major bank loans, designed to give customers the essential home loan features they need, at competitive rates.  These white-label home loans are available through just over 85% of Australia’s mortgage brokers, and distributed under the brands of mortgage aggregators and mortgage managers. Those mortgage aggregators include PLAN Australia, FAST, Choice Aggregation Services, Australian Finance Group, Connective, Smartline, Astute, Loan Market and LJ Hooker Home Loans.

The new loans are:

  • 3.74% per annum for new owner occupier P&I variable rate loans
  • 4.24% per annum for new residential investor P&I variable rate loans

These rates will be available for mortgages with a minimum loan amount of $200,000 and a maximum LVR of 80%.

A simpler pricing structure for variable rate loans of $200,000 or more was also brought in today (31 May) across all loan purposes and repayment types.

General manager Brett Halliwell said “This new offer reflects Advantedge’s commitment to offering sharp rates that brokers can give to clients”

“Our white-label products are high quality and high value solutions and this new offer is yet another way Advantedge is proving its competitiveness to brokers.”

Advantedge will be further simplifying its pricing structure and rate cards to streamline the process for brokers, he added.

NAB Ventures backs Canadian fintech Company Wave

NAB’s venture capital fund, NAB Ventures, has led a US$24 million (AU$32 million) Series D funding round in Toronto-based cloud fintech company, Wave.

Wave delivers cloud-based financial management software including accounting, invoicing, and payroll with seamlessly integrated financial services such as credit card processing and lending.

Hear from NAB Ventures’ Melissa Widner and Wave CEO and Co-Founder Kirk Simpson talking about the new relationship here (8.34min)

Targeting entrepreneurs with fewer than 10 employees, Wave has over two and a half million small business customers in more than 200 countries around the world, including more than 35,000 active users in Australia.

The Series D funding round also includes funding from Royal Bank of Canada (RBC), Silicon Valley venture firms CRV and Social Capital, global funds OurCrowd and Harbourvest, as well as Canadian investors OMERS Ventures, BDC IT Venture Fund, BDC Capital and Portag3.

Commenting on the equity investment, General Partner NAB Ventures, Melissa Widner, said: “We’re looking forward to working with Wave, which has developed an interesting approach to cloud software and financial services aimed at small businesses with under 10 employees.

“We were impressed with how Wave’s offering gives entrepreneurs the tools they need to be successful, along with the fact their invoicing and accounting software are free with customers able to purchase additional financial services to suit their requirements as needed.

“As the largest business bank in Australia with over 450,000 small and medium business customers, we are interested in any emerging technologies in this space that provide customers with a connected experience.”

NAB Ventures has the right to appoint an observer to the Wave board.

Wave Co-Founder and CEO, Kirk Simpson, said: “At Wave we believe that the way to help small businesses succeed is with powerfully integrated financial services and software. By helping business owners manage their cash flow, prepare for tax time and gain actionable business insights, Wave covers the spectrum of a small business owner’s financial life, and helps their businesses grow and thrive.

“We all know that small businesses power the global economy, and nobody understands Australian small businesses better than NAB. We look forward to exploring together how to serve those business owners better.

“We also believe that innovative partnerships between technology companies and world-class banks will lead to transformative solutions in the market. In NAB and RBC, Wave has forward-looking, innovative bank partners on two continents, opening the door to those transformations,” he said.

For more information on Wave, visit www.waveapps.com.

-About Wave-

Wave is changing the way small businesses make money, spend money and track money.  Wave delivers cloud-based financial management software with seamlessly integrated financial services to business owners around the world. Over 2.5 million business owners around the world have used Wave to help manage their finances, and over 60,000 new businesses join the Wave ecosystem every month. For more information, visit www.waveapps.com.

NAB Cuts LVR on Interest Only loans

From Australian  Broker.

National Australia Bank (NAB) has slashed the loan to valuation ratio (LVR) on its interest only loans as it works to fulfil new regulatory requirements.

The changes, effective from 10 June, will set the new maximum LVR for interest only loans at 80%. Previously, this sat at 95% for owner occupiers and 90% for investors.

“NAB is making changes to some of its policies regarding interest only home loans to ensure we continue to meet our regulatory requirements and responsible lending obligations,” the bank said in a broker note

These changes come into play as a result of the 30% cap on interest only lending set out by the Australian Prudential Regulation Authority (APRA) on 31 March. The regulator has requested that this speed limit be met by 1 July.

“As always, NAB wants to continue to ensure we provide customers with product solutions that are in line with their needs, and it is often the case that a principal and interest loan may be the most suitable arrangement.”

The new maximum LVR for construction loans has also been changed to 90%.

Businesses warned of a malicious NAB email scam

From Smart Company.

A simple email phishing attack impersonating big four bank NAB was reportedly sent to thousands of Australians yesterday, notifying them their account was disabled in an attempt to steal users’ banking details.

Mailguard reports the email was sent around on Thursday afternoon, stemming from a legitimate looking email address,”discharge.authority@nab.com.au”.

The subject line included just the word “Notification” with the email itself being nothing more than a four line message telling customers their account had been “disabled”.

The malicious email then directed users to a website with a realistic-looking NAB login screen, inviting users to enter their NAB ID and password. The website included links to register for a NAB account and “forgotten password” prompts to boost the appearance of legitimacy.

The purpose of a phishing scam is to steal an unsuspecting users’ login details or personal data by posing as a legitimate company. Examples in the past have included emails appearing to be from Australia Post, Amazon, and Twitter.

In response, Fairfax reports NAB had successfully issued a takedown notice for the fake website, with a spokesperson saying “we remind customers, NAB will never ask you to confirm, update or disclose personal or banking information via email or text”.

On the bank’s website, it advises customers to forward any malicious emails to spoof[at]nab.com.au and then delete the email.


Source: Mailguard

Many recent phishing emails have relied on well-crafted and apparently legitimate websites to fool customers, and founder of IT services company Combo David Markus told SmartCompany this morning that setting one of these fake sites up is a matter of “a few hours work” for a cyber criminal.

“Once it’s created, a cyber criminal can create multiple copies of multiple different web servers and run the phishing attack over and over again,” he says.

“Phishing attacks have become a numbers game, with hackers looking for the cheapest and most efficient way to get dollars out of our bank accounts, and it’s all about the number of people they catch.

“If they make $100, that’s a good day.”

Markus says the scammers have chosen to pose as a big bank like NAB in hopes of increasing the number of users duped by the attack, saying people are more likely to click on something they’re familiar with. However, on the spectrum of cyber attacks, Markus call this one “relatively unsophisticated”.

“I would say these days it’s a relatively unsophisticated attack, but unfortunately there are enough unsophisticated recipients they’re going to keep catching enough people out to make it worthwhile,” he says.

Markus’ advice is to avoid clicking on any links in emails like these ones and instead using traditional channels to check the status of your bank account.

“If someone sends you something that you click on and it wants you to enter your password, don’t,” he says.

“Go via the company’s homepage or however you would usually check your account. Never follow any links in emails that ask for your username or password.”

SmartCompany contacted NAB but was not provided with a statement prior to publication

NAB Estimates Bank Tax Impact

NAB also told their shareholders about the impact of the proposed bank tax.

As one of NAB’s valued shareholders, I feel it is important you hear from me directly about the major bank tax announced in the Federal Budget on 9 May and what it will mean for NAB.

The tax – $6.2 billion over four years – is poor public policy that will affect every Australian.

We are concerned the tax has been developed without sufficient consultation or consideration of the impact on bank customers, shareholders, suppliers and employees – or indeed the broader economy.

There remain many unanswered questions. But based on what the Government has announced to date, and applied to our business as it stands, the tax could cost NAB approximately $350 million annually, or $245 million post tax.

However the actual cost will not be known until the final legislation for the tax has been passed and we can fully assess its impact on NAB’s business.

NAB will continue to strongly object to this tax and will do so by engaging with you, the broader community and with the Government and Parliament.

We are encouraging a Senate committee to conduct an inquiry into the legislation to enact the tax, so Australians can have a deeper understanding of the process behind the tax and how it will work.

We have also called for the exposure draft legislation to be released for public consultation so the community can have its say. This is an important step for a reform of this scale and nature.

Given the tax is being enacted for the purposes of budget repair, we have encouraged, through our initial public response, the inclusion of an end date for the legislation once its stated objectives have been met.

The Government has said this tax can be simply “absorbed”. You know, I know and the Government knows that a tax cannot be “absorbed”. It must be passed on somewhere.

No decisions have been made on how we will seek to manage the cost of this new tax. While we must balance the interests of all of our stakeholders, the options available to us are limited.

We could reduce what we spend with our more than 1700 suppliers. Many of these are small businesses that have provided great support and service to our bank over many years. Reducing our spend on suppliers also affects our customers and shareholders.

We could increase the rates we charge borrowers or reduce the rates we pay savers.

We could invest less in new products, facilities and services for our 10 million customers.

We could invest less in our workforce; all 34,000 employees, most of whom live and work in the communities they serve across Australia.

Or we could allow this new tax to affect our profitability. This would impact our shareholders – the 570,000 people like you who own shares in the bank directly and the millions of Australians who own NAB shares through their superannuation fund.

We will continue to advocate for you, our shareholders. You invest your savings in NAB and together with all our stakeholders are what make our company what it is today.

The Board is interested in your views on this tax and how we can represent you. Please share any feedback or thoughts you might have by emailing Shareholder.Centre@nab.com.au

Thank you for your continued support.

$200m+ Refunds Due From Major Financial Advisory Firms – ASIC

ASIC says AMP, ANZ, CBA, NAB and Westpac have so far repaid more than $60 million of an expected $200 million-plus total in refunds and interest for failing to provide general or personal financial advice to customers while charging them ongoing advice fees.

These institutions’ total compensation estimates for these advice delivery failures now stand at more than $204 million, plus interest. As foreshadowed in ASIC’s Report 499 Financial advice: fees for no service (REP499), ASIC can now provide an update on compensation outcomes to date.

Background

In October 2016 the Australian Securities and Investments Commission (ASIC) released REP499. The report covered advice divisions of the big four banks and AMP and described systemic failures to ensure that ongoing advice services were provided to customers who paid fees to receive these services, and the failure of advisers to provide such services. The report also discussed the systemic failure of product issuers to stop charging ongoing advice fees to customers who did not have a financial adviser.

At the time of the publication of the report compensation arising from the fee-for-service failures reported to ASIC was approximately $23.7 million, which had been paid, or agreed to be paid, to more than 27,000 customers.

Since REP 499 a further $37 million has been paid or offered to more than 18,000 customers. In addition, the institutions’ estimates of total required compensation for general and personal advice failures have increased by approximately 15% to more than $204 million, plus interest.

The table provides, at an institution level, compensation payments and estimates that were reported to ASIC as at 21 April 2017. Since that date compensation figures have continued to increase.

Group Compensation paid or offered Estimated future compensation   (excludes interest) Total (estimate, excludes   interest)
AMP $3,816,327 $603,387 $4,419,714
ANZ $43,818,571 $8,613,001 $52,431,572
CBA $5,850,827 $99,786,760 $105,637,587
NAB $4,641,539 $385,844 $5,027,383
Westpac $2,670,479 Not yet available $2,670,479
Total (personal advice   failures) $60,797,743 $109,388,992 $170,186,735
NULIS   Nominees (Australia) Ltd (1) Nil $34,720,614 $34,720,614
Total (personal and general   advice failures) $60,797,743 $144,109,606 $204,907,349

Source: Data is based on estimates provided to ASIC by the institutions and will change as the reviews to determine customer impact continue.

(1) For details, see the section on NAB below.

Key compensation developments

AMP

  • AMP’s total compensation estimate decreased from $4.6 million to $4.4 million as AMP reviewed customer files and data to determine compensation required, and revised its previous estimates.

ANZ

  • The total compensation estimate has increased from $49.7 million to $52.4 million due to the expansion of existing compensation programs and the identification of further failures by authorised representatives of two ANZ-owned advice businesses:
    • Financial Services Partners Pty Ltd; and
    • RI Advice Group Pty Ltd.
  • The largest component of ANZ’s compensation program relates to fees customers were charged for the Prime Access service, where ANZ could not find evidence of a statement of advice or record of advice for each annual review period.
  • In addition, ANZ found that further compensation of approximately $7.5 million is required to be paid to ANZ Prime Access customers for ANZ’s failure to rebate commissions in line with its agreement with customers. This compensation has not been included in the figures in this media release because it does not relate to a failure to provide advice for which customers were charged, but is noted for completeness and transparency.

CBA

  • There has been no substantial change in CBA’s compensation estimate, which remains at approximately $105 million, plus interest, the majority of which relates to Commonwealth Financial Planning Ltd (CFPL). The compensation estimate for CFPL results from a customer-focused methodology whereby, as well as providing refunds where the adviser failed to contact the client to provide an annual review, CFPL will provide fee refunds to customers where:
    • the adviser offered the customer an annual review and the customer declined, or
    • the adviser tried to contact the customer to offer a review, but was unable to contact the customer.
  • Some of the other licensees or banks covered by the ASIC fees-for-no-service project have not, at this stage, adopted a similar customer-focused approach to the situation in which a service was offered but not delivered.  ASIC continues to discuss the approach to this situation with these banks and licensees.

NAB

  • Since the publication of REP 499, by 21 April 2017, NAB reported to ASIC the further erroneous deduction of adviser service fees for personal advice from more than 3,000 customers of the following licensees:
    • Apogee Financial Planning Ltd: $11,978, from 11 customers;
    • GWM Adviser Services Ltd: $179,446, from 290 customers;
    • MLC Investments Ltd: $9,755, from six customers;
    • National Australia Bank Ltd: $2,777, from seven customers; and
    • NULIS: $173,120, from 3,310 customers.
  • In addition, the table shows the expected compensation of approximately $34.7 million by NAB’s superannuation trustee, NULIS Nominees (Australia) Limited (NULIS), for two breaches involving failures in relation to the provision of general advice services to superannuation members who paid general advice fees (other fees referred to in this release relate to personal advice). As announced by ASIC on 2 February 2017 ASIC has imposed additional licence conditions on NULIS following these and another breach: ASIC MR 17-022. The failure was by MLC Nominees Pty Ltd (and MLC Limited for the first of the two breaches).  Whilst on 1 July 2016 the superannuation assets governed by MLC Nominees were transferred by successor fund transfer to NULIS, and on 3 October 2016 NAB divested 80% of its shareholding in the MLC Limited Life Insurance business, accountability for this remediation activity (including compensation) remains within the NAB Group. The estimate of customer accounts affected has increased from approximately 108,867 to 220,460 since REP 499, reflecting the second of two breaches.

Westpac

  • REP 499 noted that Westpac had identified a systemic fees-for-no-service issue in relation to one adviser only, with compensation of $1.2 million paid in relation to those failures.
  • Following further ASIC enquiries, Westpac subsequently clarified that it has paid further compensation of approximately $1.4 million to 161 customers of that adviser and 14 further advisers, in respect for fee-for-no-service failures in the period 1 July 2008 to 31 December 2015.

Next steps

ASIC will continue to monitor these compensation programs and will provide another public update by the end of 2017.  In addition ASIC will continue to supervise the institutions’ further reviews to determine whether any additional instances are identified of fees being charged without advice being provided.

MoneySmart

Customers who are paying ongoing advice fees for services they do not need can ask for those fees to be switched off. Customers who have paid fees for services they did not receive may be entitled to refunds and compensation, and should lodge a complaint through the bank or licensee’s internal dispute resolution system or the Financial Ombudsman Service.

ASIC’s MoneySmart website has a financial advice toolkit to help customers navigate the financial advice process and understand what they should expect from an adviser. It also has useful information about how to make a complaint.

Bank launches AI ‘home loan assistant’

From The Adviser.

A new chatbot has been launched by UBank to help answer customers’ home loan questions, in what is being billed as Australia’s “first virtual assistant for home loan applications”.

RoboChat has been launched by the NAB-owned online bank as a “virtual assistant to help potential homebuyers and refinancers complete their online home loan applications” and “simplify the home loan application process”.

The new chatbot has been built by IBM Watson to act as a virtual assistant to aid customers through the home loan application form.

According to UBank, the bot — which is still “in training” — aims to “help reduce the time needed for customers to complete the form by offering on-the-spot help”.

It has been trained on data collected from customer questions submitted via UBank’s LiveChat experience, and has been tested by “dozens of users and iteratively trained”.

UBank has said that the bot’s artificial intelligence will “continue to learn as more customers engage with it, becoming smarter and more user-friendly over time”.

However, the bank has been emphatic on the fact that the bot “won’t affect the size of the local UBank customer service team or the great work they do”.

Speaking of the product, the CEO of UBank, Lee Hatton told The Adviser that RoboChat was created to help customers overcome the “fear of how long it will take to fill out the applications”.

When asked if the platform was meant to emulate what a broker does, Ms Hatton said: “RoboChat was designed specifically to guide customers through UBank’s online home loan application form.

“UBank doesn’t use mortgage brokers, so RoboChat, along with our experienced advisers, can help customers as they decide which home loan is right for them.”

Ms Hatton added that the chatbot is available 24 hours a day, 7 days a week so can provide real-time answers, but customers can still use a bank adviser to assist with “more specific support or [questions] fitting to [an] individual situation”.

Putting RoboChat to the test

Once a user selects that it wants to start a home loan application, the RoboChat option opens up alongside the online application process. It is here that users can ask the bot questions. The website notes that once an application is completed (with questions answered), a home loan specialist will be in touch to move the process forward.

When first opened, the chatbot introduces itself as Ubank’s “beta virtual assistant”, adding that it is “still in training” and will “do [its] best to answer your home loan questions”. It says you can speak to a real person at any time.

The Adviser tested out the platform, and it successfully answered simple questions such as “What is your variable rate?’ (with that answer being 3.74 per cent) and “Do you have an offset?” (which it doesn’t), as well as “What are your charges?” (it doesn’t have any unless the loan is fixed rate) but struggled when the next question was a new subject (“Can I have an interest-only loan?”), responding that it was “wasn’t expecting that kind of response”.

However, once establishing that the user was still interested in interest rates, and ascertaining that the user was an owner-occupier, the bot asked if it was for principal and interest, or interest-only. Once interest-only was chosen, the bot produced the interest rates with comparison rates (4.13 per cent with the Real Reward Offer or 4.46 (4.39 per cent comparison) without).

When asked “Should I use a broker?” the RoboChat asked for the question to be rephrased. When asked “Do you have a broker?”, it said: “We’re an online bank so we don’t have branches, mobile lenders, or use brokers. The upside is we have fewer costs than traditional banks and we pass the savings onto you. Do you want to know more?”

It also understood “Can you tell me your LVR?”, but struggled with “What is your LVR?”, and didn’t understand “Can I refinance?” but knew the answer to “How do I refinance?”.

When asked “How much can I borrow?” RoboChat said: “I can’t perform calculations just yet” and offered links to tools and calculators.

The platform handled other questions, such as “I’m self-employed. Do you have a loan for me?”, responding “To ensure we’re a good match, your primary income needs to be from an Australian PAYG source of a company not owned by you. And, all applicants must be either an Australian citizen OR Australian Permanent Resident OR a NZ citizen AND reside in Australia. As a bank, we’ll always need to perform a credit assessment based on the details of each applicant.”

While the bank has said that it has in-built humour and offers “tongue-in-cheek responses”, the bot was not able to respond to the joke as outlined in the press release (“How much does a hipster weigh?” Answer: “An Instagram”), instead saying “Hmmmm, I’m a bit confused. Can you rephrase your question?” When asked for the meaning of life, it did say, however, “Simpler, better, smarter is my life motto!”

Ms Hatten commented: “Our goal is to deliver simpler, better, smarter banking to our customers and RoboChat will help deliver on this by streamlining the application form.

“RoboChat will be a very welcome addition to our team of customer service experts” continued Hatton.

“UBank will still have experienced staff on hand to chat on the phone, via email and our live online chat offering, RoboChat will provide an added option for those needing quick online responses or those that are close to finalising the form.”

Brock Douglas, vice president of Watson for IBM Asia Pacific added: “From deepening the customer experience, to increased productivity for employees, virtual assistants are being adopted across industries and becoming more advanced in natural conversation and emotional intelligence, with the help of cognitive technology.

“UBank’s work with IBM Watson is a powerful example of how organisations are leveraging cognitive virtual assistants that have the ability to engage in a conversation, ask questions, learn and respond in context – as opposed to providing stock responses.”

Treasury Receives Big Bank Feedback

NAB and ANZ have released their formal responses to Treasury relating to the liability tax.

NAB believes the levy is poor policy and, accordingly, does not support it. It says the levy is not just on banks, it is a tax on every Australian who benefits from, and is part of, the banking industry.  They then try to define the bounds and sensitivity of the calculation, with a view to reducing its impact.

NAB requests the production of a Regulatory Impact Statement (RIS) and a period of public consultation on the draft legislation. NAB recommends the levy be applied to the netted derivative balance sheet and collateral position. NAB recommends that the basis for the levy be adjusted for the impacts of the accounting gross ups which occur as a function of inter-company transactions. NAB recommends that the funding of high quality liquid assets be excluded from the levy calculation. NAB recommends that repurchase agreements be excluded from the calculation of the levy. NAB recommends the exclusion of non-funding liabilities, in particular, liabilities and provision for taxes and the levy. NAB recommends that, if included, only targeted anti-avoidance measures are contained in the
legislation. NAB also recommends that discretion be applied on any penalties for under payment.

It needs to be read in conjunction with their CEO’s earlier comments.

ANZ has more broadly tried to explain the potential impact of the tax on customers and shareholders. They also suggest a delay till September 2017 to allow sufficient time for design of the legislation and recommends the tax should be applied to the domestic liabilities of all banks operating in Australia with global liabilities above $100 billion. Finally, they argue the levy means it would be appropriate to re-think the need for any bank loss-absorption framework in Australia.

Westpac said last week:

“Westpac Group CEO, Brian Hartzer, said the new bank tax is a hit on the retirement savings of millions of Australians as well as all bank customers.

This levy is a stealth tax on their life savings, the shares in their superannuation accounts, and it will make Australia’s banks less competitive.

“Yesterday, $14 billion of value was wiped off Australian bank shares because of speculation around this new tax.

“There is no ‘magic pudding’. The cost of any new tax is ultimately borne by shareholders, borrowers, depositors, and employees.

“The Australian banks are already the largest taxpayers, with Westpac the country’s second largest taxpayer. Westpac already pays over 30% of its profits in tax and this will now increase even further,” Mr Hartzer said.

“While similar taxes operate in other international jurisdictions, they were introduced to recover the cost of Governments having to take over their banks. No taxpayer funds have been used to prop-up the Australian banks. In addition, international jurisdictions that apply measures such as this already have much lower corporate tax rates than Australia – for example, in the UK the corporate tax rate is 20%.

“It is disappointing that the Australian Government has implicitly favoured large foreign banks over Australian banks operating in their home market.

“In addition these reforms are directly counter to APRA’s objective of making the banks unquestionably strong, as higher taxes reduce the banks’ ability to generate capital that supports lending and stability in times of stress.”

All Taxes Are Paid For By Everyday People

The following opinion piece by NAB Group CEO Andrew Thorburn was first published in the Herald-Sun on 15 May 2017: 

Australians make choices every day as to how they balance their own budget, managing their income with the bills they have to pay.

For a family that means if the price of groceries or electricity goes up, they have to decide how those costs will be borne. There is no magic solution to fill the gap – choices have to be made about what to spend less on, what things to go without.

It is the same for any business, large or small, such as a builder, a hairdresser or a coffee shop owner. If their costs go up (or they have more tax to pay), they too need to find a way to manage those costs against their income.

In reality the options are limited.

They can charge more for their services.

They can invest less in the training and development of their employees or make the tough decision to have fewer employees.

Or, as the owner of the business, they can accept less profit in return.

A bank is no different.

When our costs go up we must decide whether to reduce what we spend with suppliers. These include the people who own the properties we lease as branches and business centres; the agencies we pay to advertise our services or the companies that provide and help manage our technology

Or we can increase the rates we charge borrowers or reduce the rates we pay savers.

We must decide whether to invest less in new products and services, or less in our employees – all 34,000 of them who live and work in the communities they serve right across Australia

Or we can decide to return less to our shareholders. These are every day Australians who own shares in the bank either directly or through their super fund

Last week the Federal Government announced how it plans to balance the national budget. We agree on the need to return to surplus – but this must be done carefully and with long-term planning and consideration of the consequences.

So, while the new tax on the major banks might seem an easy solution, the fact is the cost of this tax will be borne by people.

That is because a bank is made up of the everyday people listed above: our customers – the savers and borrowers; our suppliers, our employees and our shareholders.

That is who “the bank” is.

In response to the new tax – $6.2 billion over four years, on top of the billions of dollars already paid by the major banks – it is wrong to state it can simply be absorbed.

The reason is simple. As any family or small business knows a tax is a cost, and a cost must be passed on somehow. No cost can be “absorbed” – even if a family or business is successful and doing well.

It is right to say Australia’s banks are strong and profitable.

And that is a good thing – because strong and profitable banks are vital to the health of any economy.

It means that we can continue to lend to Australian businesses to grow, and to provide loans to people to buy their own home. It allows us to pay our suppliers and our employees; and invest in our own business so we can be better.

But the vast majority of bank profits – in NAB’s case about 80 per cent – are returned to our shareholders twice a year in dividends (the rest is retained to invest in improving the bank and as capital to allow further lending).

So when people say the banks can afford the new tax and don’t have to pass the cost on, they must mean that the millions of retail shareholders – everyday Australians – who are the owners of our major banks can afford it.

For NAB alone, there are about 570,000 direct owners in our company. About 174,000 are Victorians who live in communities like Sunshine, Preston, Mildura and Warrnambool.

Another 161,000 people in New South Wales own shares in NAB, a further 84,000 Queenslanders, 71,000 West Australians, 34,000 people in South Australia, 8500 in the ACT, 6500 in Tasmania and 1500 in the Northern Territory.

Many of these are mums and dads, retirees and pensioners who hold small parcels of less than 1000 shares.

The income these shares pay – $1.98 in dividends for every share, fully franked, last financial year – help these Australians manage their household budgets.

Then there are the millions more Australian workers with superannuation who own shares in the major banks through their super fund.

This new tax will hit all these groups. For all of them it represents a potential pay cut, now or in retirement.

Banks exist to serve and support their customers – the borrowers and the savers. They provide jobs to more than 150,000 employees, and work and opportunity for countless suppliers. They are owned by millions of every day Australians.

The cost of this new tax will be borne by all these people.