--ANZ passes on RBA's 25 basis point rate cut in full to
customers
--ANZ variable mortgage and small business rates cut to
6.80%
--Move ramps up pressure on major lenders to cut rates
(Adds funding costs in 7th-9th paragraphs; Treasurer's comments
in 10th paragraph)
By Caroline Henshaw
SYDNEY--Australia & New Zealand Banking Group Ltd. (ANZ.AU)
on Friday became the first of Australia's banks to pass on this
week's 25 basis point rate cut by the central bank in full to its
customers.
From June 15, ANZ will lower its variable mortgage and small
business lending interest rates to 6.80%, or about A$13.50 in
savings per week on an average mortgage of A$280,000.
On Tuesday, the Reserve Bank of Australia reduced the cash rate
to its lowest level since 2009 at 3.50% in a bid to boost slowing
growth in the economy.
"This decision recognises that, although we need to be realistic
about funding costs and the challenges the global economic
situation is presenting, ANZ also needs to absorb its share of the
burden," said Philip Chronican, the chief executive of ANZ's
Australian operations.
Regional lender Bank of Queensland Ltd. (BOQ.AU) and ING Direct
have both cut their variable mortgages by 20 basis points since the
RBA cut.
ANZ Bank's move will ramp up pressure on Australia's other major
lenders--Commonwealth Bank of Australia (CBA.AU), National
Australia Bank Ltd. (NAB.AU) and Westpac Banking Corp.
(WBC.AU)--which have yet to announce any changes to their own
rates. Much of their decision hinges on the cost of raising funds
overseas, which has surged as Europe's debt crisis has hit
confidence.
Westpac's head of government and industry affairs Brett Gale
said in a recent submission to a Senate enquiry that 3-year-term
international funding costs have risen 160 basis points since 2007,
while 5-year term funding costs have increased by 200 basis
points.
"Funding costs remain elevated as a result of the deteriorating
economic situation in Europe and strong competition for deposits,"
said ANZ's Chronican.
Treasurer Wayne Swan, who strongly criticized the big four banks
when they held back part of the RBA's 50 basis point cut last
month, said after ANZ's announcement that "the heat is really on
the other banks" to follow ANZ in passing on the full cut to
customers.
Write to Caroline Henshaw at caroline.henshaw@wsj.com