Archived News for Finance Sector Professionals
The National Australia Bank has announced it will keep its UK subsidiaries, but is refusing to comment on speculation on if it will make a move on the 632 retail branches of Lloyds’ bank.
European authorities have ordered the sale of the bank’s assets after the bank neared collapse during the global financial crisis.
The purchase of Lloyds’ assets would see the NAB significantly expand its UK presence. Currently the NAB’s folio contains the Clyesdale and Yorkshire bank. The purchase of Lloyds would see the NAB take the 5 per cent stake Lloyds currently has in the British retail banking market.
Former directors of now insolvent Opes Prime Stockbroking Lirim Emini and Anthony Blumberg have pleaded guilty to charges relating to the collapse of the firm in 2008.
Westpac has bucked the trend of other banks and has voiced its expectations that the Reserve Bank of Australia (RBA) will drop the cash rate by a full percentage point over the coming year.
The Institute of Public Accountants (IPA) is seeking to establish client privileges for accountants similar to those enjoyed by lawyers in protecting their tax advice to clients.
A majority of economists surveyed by the Economic Society of Australia at the Australian National University (ANU) have supported the implementation of the Federal Government’s planned carbon tax as a sound economic policy.
The simplification of Australia’s ‘inordinately complex’ personal tax system has caused concern for the future of Australia’s 40,000 tax assistants.
The Australian Securities and Investment Commission (ASIC) has released a consultation paper outlining proposals to improve disclosure for retail investors considering investing in unlisted property schemes.
The proposals follow an ASIC review of disclosure documents issued by responsible entities in the $28 billion unlisted retail property sector.
ASIC found a number of key disclosures were not adequately addressed, including:
The Australian Securities and Investment Commission (ASIC) has published its second report on the supervision of markets and participants.
ASIC assumed responsibility for market supervision and real-time surveillance of trading from ASX on 1 August 2010. ASIC also supervises compliance with market integrity rules, compliance with the Corporations Act 2001 and ensures that Australian financial services licence conditions are met by market participants.
ASIC Commissioner Shane Tregillis said, “ASIC is building investor confidence by ensuring Australian financial markets are efficient and fair. We are doing this through thorough surveillance of the market and by taking pre-emptive action to prevent possible market misconduct. We are increasing our engagement with industry and providing education and guidance to participants.
“However pre-emptive engagement will not replace deterrence and when we find serious market misconduct we are taking timely deterrence action. Market participants and operators are important gatekeepers and we expect them to have controls in place to ensure conduct in accordance with required standards and to demonstrate a culture of compliance,’ said Mr Tregillis.
Report 243 ASIC supervision of markets and participants: January to June 2011 (REP 243) identified that during the reporting period there were 23,494 trading alerts, with 121 matters requiring further consideration. Some 35 matters were referred for investigation. These matters involved potential insider trading (17), market manipulation (6), possible breaches of the market integrity rules (10) and of continuous disclosure obligations (2).
In addition to the 35 markets matters, a further eight participant matters were identified during ASIC’s participant surveillance visits and referred for investigation – three of which relate to supervision of representatives. Prevention of unauthorised trading and appropriate supervision of representatives are key themes addressed during our visits and ASIC expect participants to have appropriate controls and culture in place.
Matters concerning order management including problematic algorithms and orders for some exchange-traded funds (ETFs) have been identified in our work with participants. ASIC is continuing to work with market participants and their clients to reduce the risk of algorithms having a negative impact on market integrity and to ensure that orders from retail clients for ETFs are not priced significantly from their intrinsic value taking into account the value of the underlying reference asset. For example we have identified a number of instances where index ETFs have traded well away from the price of the underlying index.
Analysis of potential insider trading matters has identified some instances where corporate advisers have not had appropriate controls in place to ensure that there is restricted access to price sensitive information.
The time taken to commence investigations from misconduct identification has continued to fall with approximately 40% of all referrals progressing to investigation in under 30 days from identification of the misconduct.
A $10 billion Clean Energy Finance Corporation to invest in the commercialisation and deployment of renewable energy and enabling technologies, energy efficiency and low-emissions technologies has been announced as part of the Federal Government's carbon price package.
Official figures released by ASIC reveal that corporate insolvencies have risen 4.4% in the 2010-11 financial year to date.
ASIC’s Senior Executive Leader of the Insolvency Practitioners team, Adrian Brown, said that despite a decrease in external administration appointments in May compared to the same time last year, the latest figures show the number of court liquidations and director initiated creditors voluntary liquidations have risen.
‘Statistics collated by ASIC up to and including May 2011, show court liquidations in Australia rose 8.6% and director initiated creditors voluntary liquidations rose 7.6%.
Western Australia is also seeing its fair share of corporate insolvencies, despite suggestions that it’s in the fast lane of a two speed economy,’ Mr Brown said.
‘Interestingly, receivership and voluntary administration appointments, Australia-wide, have fallen,’ Mr Brown added.
ASIC publishes monthly insolvency statistics detailing the number and type of corporate insolvency appointments. External administrators, (liquidators, receivers and managers and voluntary administrators) are obliged by law to advise ASIC of their appointments.
A consortium headed by the University of New South Wales has won the tender for a $41 million Centre for International Finance and Regulation.
Medicare will be responsible for the administration of early release of superannuation on compassionate grounds following the introduction of new legislation into Parliament.
The Australian Securities and Investments Commission (ASIC) has highlighted a number of focus areas for directors in 30 June 2011 financial reports after releasing the results of its reviews of financial reports for the year ended 31 December 2010.
A statistical analysis of initial public offerings (IPOs) shows that private equity backed IPOs have historically recorded higher average returns than non-private equity backed listings.
The study by the Australian Private Equity and Venture Capital Association (AVCAL) found that newly listed shares by private equity (PE) firms outperformed non-PE backed listings across all time horizons analysed from one day to three years after IPO listing, with average returns ranging from 4 per cent to 78 per cent across the different time scales compared to minus 2 per cent to 4 per cent for non-PE backed IPOs.
The results also showed that PE-backed IPOs’ outperformance tended to increase over time. The average share price of PE-backed stocks grew by 1.78 times over a three year period after listing compared to non-PE stocks which averaged 0.98 times their listing price. PE backed IPO average share prices were also higher after one day, one week, six months, one year and two years post listing.
AVCAL CEO Dr Katherine Woodthorpe said that the research disproves the notion that PE backed IPOs consistently underperform compared to non-PE backed stocks.
“There has been a misguided view in some quarters that private equity investment doesn’t have a long term benefit to investors beyond the PE ownership period,” she said.
“This study clearly demonstrates that PE backed IPOs brought superior returns on average than non-PE backed IPOs even up to three years after listing. In fact, PE backed IPOs outperformed more, on average, over longer time horizons.”
Dr Woodthorpe said PE backed companies have cited factors such as rigorous strategic oversight and governance, speed of decision making and the freedom for senior management to concentrate on operational performance as some of the key benefits of PE ownership.
“Private equity develops governance systems and processes within companies to prepare them for the rigours they face entering a public market environment. These factors become culturally embedded in the organisations and are to the benefit of subsequent owners.”
The study, ‘An analysis of the performance of private equity-backed IPOs in Australia’, was peer-reviewed to validate the research methodology and findings.
The study analysed all IPOs valued at $100m and above from 23 October 2003 to 8 Nov 2010. This period included 14 PE backed IPOs and 88 non-PE backed IPOs.
To validate the robustness of the results, alternative time periods were analysed, as well as the possible distortionary effects of a small number of extreme performers on the average returns. The study also used various weighting, index and sector-matching measures to obtain more balanced comparisons.
For example, the analysis included the construction of weighted indices to compare the concurrent performances of PE and non-PE-backed IPOs over time.
Over the seven-year period, the PE-backed index more than tripled from the base figure of 1,000 to 3,386 while the non-PE IPO index rose to 2,099. Both indices outperformed the S&P/ASX 200 Accumulation Index market benchmark which rose to 1,985 over the same period.
This analysis was also repeated using only the industry sectors which had both PE and non-PE IPOs, resulting in an even greater outperformance by PE backed IPOs. Over the entire seven-year period of the study, PE IPOs generated a compound annual growth rate of 19.03 per cent compared to just 0.52 per cent for non-PE IPOs.
The IPO report can be found at the AVCAL website www.avcal.com.au under Research.
Joint Committee of Public Accounts and Audit, chaired by Independent MP, Rob Oakeshott, has called for the Australian Taxation Office to report back in six months on action it has taken to improve complaint handing and to address the causes of complaints.
Data compiled by finance consultants MISC Global shows that the rate of mortgage ‘churning’ through mortgage brokers has declined sharply, with the number of brokers selling a mortgage in the March quarter falling to 119 from 161 in the same quarter last year.
The merger of public sector superannuation fund, First State Super with Health Super on 30 June 2011 has created a super fund with over $30 billion and more than 770,000 members.
A new data matching initiative between Centrelink and the Australian Taxation Office is expected to claw back millions of dollars from welfare recipients who have debts with the Australian Government.
Minister for Human Services Tanya Plibersek said the new initiative will enhance Centrelink’s debt recovery ability and is expected to recover more than $71 million over four years.
Beginning on July 1 this year, Centrelink and the ATO will automatically match data on a daily basis as a way of cross-checking former welfare recipients who have a debt with the Commonwealth.
Those who are identified as having debts and who haven't made repayment arrangements with Centrelink may have their tax refunds garnisheed when they lodge their income tax return.
"The Government prefers to work with people and provide them with flexible debt repayment options, rather than having to garnishee their tax refunds," said Ms Plibersek. "But if people fail to come to an arrangement to settle their debts, the Government has a responsibility to taxpayers to recover that money."
Ms Plibersek said Centrelink customers sometimes incurred a debt with the Commonwealth because they either inadvertently or intentionally claimed a benefit they were not entitled to.
Assistant Treasurer Bill Shorten said the tax garnishee process had been carried out manually once a year for the past 15 years and involved a significant amount time on the part of the departmental officers.
"The automation of this process will free up resources and result in more people being referred to the tax garnishee process, retrieving more outstanding debt on behalf of taxpayers," he said.
He said more than $27.5 million was recovered from over 43,000 former Centrelink customers' tax refunds in the 2009/10 financial year through the tax garnishee process.
"The new data matching link is expected to increase the number of former customers identified for this process by an additional 65,000, above current detection levels, over the four years."
Mr Shorten said under the new initiative people experiencing financial hardship will continue to have the opportunity to enter into an alternative repayment arrangement.
Centrelink is currently writing to over 90,000 people with outstanding debts who are not currently receiving a payment from Centrelink or the Family Assistance Office.