1 00:00:00,120 --> 00:00:02,600 Speaker 1: So the Reserve Bank, as Andrew told us earlier on 2 00:00:02,640 --> 00:00:04,960 Speaker 1: moving on its capital requirements for retail banks. Now this 3 00:00:05,000 --> 00:00:06,360 Speaker 1: is the amount of money that banks have to put 4 00:00:06,360 --> 00:00:08,720 Speaker 1: a side for trouble. The counter argument from people like 5 00:00:08,760 --> 00:00:10,720 Speaker 1: the Finance Minister is the more you have to put 6 00:00:10,760 --> 00:00:13,000 Speaker 1: a side, the more expensive doing business becomes. The former 7 00:00:13,039 --> 00:00:17,040 Speaker 1: Reserve Bank banker, Reserve Banker Michael Riddell is back. Well, 8 00:00:17,079 --> 00:00:20,880 Speaker 1: it's Michael, very good morning to you this announcement yesterday 9 00:00:20,920 --> 00:00:23,400 Speaker 1: from Quigley the chair. Is this political or do they 10 00:00:23,560 --> 00:00:24,520 Speaker 1: genuinely want to have. 11 00:00:24,480 --> 00:00:28,800 Speaker 2: A look such? Hol I suspect most of it as 12 00:00:28,840 --> 00:00:31,880 Speaker 2: they've read the tea leaves on the wider environment. There's 13 00:00:31,920 --> 00:00:35,919 Speaker 2: been a lot of back from both these community bankers 14 00:00:36,800 --> 00:00:40,640 Speaker 2: and the Minister of Finances herself, and so you know 15 00:00:40,720 --> 00:00:43,720 Speaker 2: the uncertainty here. Is this a serious review or is 16 00:00:43,720 --> 00:00:45,160 Speaker 2: it sort of window dressing? Yeah? 17 00:00:45,280 --> 00:00:47,800 Speaker 1: Is it easily quantified? The number? Can you look at 18 00:00:47,840 --> 00:00:50,400 Speaker 1: other countries, other size economies and go, well, this is 19 00:00:50,440 --> 00:00:52,680 Speaker 1: what happens X equals why and come up with. 20 00:00:52,600 --> 00:00:56,600 Speaker 2: A number not quite that simply, but you should be 21 00:00:56,640 --> 00:00:59,000 Speaker 2: able to make big steps in that direction, you know. 22 00:00:59,320 --> 00:01:04,120 Speaker 2: Take it's Australia or in Mark Sweden from those sorts 23 00:01:04,120 --> 00:01:07,720 Speaker 2: of places as well, perhaps and look at what capital 24 00:01:07,840 --> 00:01:10,319 Speaker 2: they require to be held against particular house and exposures, 25 00:01:10,360 --> 00:01:15,080 Speaker 2: what capital ratios that require an aggregate for similar types 26 00:01:15,080 --> 00:01:16,920 Speaker 2: of lending books. Yeah, you shouldn't be able to get 27 00:01:16,920 --> 00:01:19,920 Speaker 2: to those numbers, And the Bank never did that openly 28 00:01:20,600 --> 00:01:23,080 Speaker 2: in that twenty nineteen review when Adrian put on such 29 00:01:23,160 --> 00:01:26,600 Speaker 2: high So one of their tests is how open they're 30 00:01:26,640 --> 00:01:29,280 Speaker 2: willing to be. Another is that said they're bringing in 31 00:01:29,280 --> 00:01:32,880 Speaker 2: international experts. Well, as always you can choose your own experts, 32 00:01:34,400 --> 00:01:37,319 Speaker 2: they've got to choose people who are genuinely independent and 33 00:01:37,360 --> 00:01:39,520 Speaker 2: are open to change. 34 00:01:39,200 --> 00:01:41,039 Speaker 1: Which is my next thing. If they do change, does 35 00:01:41,080 --> 00:01:43,119 Speaker 1: this prove it was an Adrian thing? 36 00:01:44,560 --> 00:01:46,119 Speaker 2: Oh? It was very clear it was an Adrian thing. 37 00:01:46,200 --> 00:01:50,600 Speaker 2: Everything in the or years was dominant personality. But you 38 00:01:50,640 --> 00:01:53,000 Speaker 2: know the question still is will they change very much? 39 00:01:53,120 --> 00:01:56,080 Speaker 2: And I heard Hawksby say yesterday at FEC that they 40 00:01:56,120 --> 00:01:59,680 Speaker 2: still think their stance is defensible, So they're a bit surprising. 41 00:01:59,680 --> 00:02:02,240 Speaker 2: If they change very much, maybe they take the last 42 00:02:02,480 --> 00:02:06,560 Speaker 2: cent off the increase in the capitol requirements. And you know, 43 00:02:06,600 --> 00:02:08,480 Speaker 2: one of the uncertainties also is you know who is 44 00:02:08,480 --> 00:02:11,680 Speaker 2: the new governor. This is a review that go take 45 00:02:11,720 --> 00:02:14,120 Speaker 2: the next six to nine months. You'd certainly hope we 46 00:02:14,120 --> 00:02:16,440 Speaker 2: have a new governor in place. By the net person 47 00:02:16,480 --> 00:02:20,240 Speaker 2: should have influence and should want to have material influence 48 00:02:20,280 --> 00:02:23,119 Speaker 2: and thinking before the Barmoks final decisions. 49 00:02:23,120 --> 00:02:25,600 Speaker 1: Good stuff, Michael, appreciate your expertise as always. Michael Ridell, 50 00:02:25,639 --> 00:02:29,560 Speaker 1: former Reserve Banker. And the argument from the retail banks is, 51 00:02:29,560 --> 00:02:31,520 Speaker 1: of course, and has been for years, that the reason 52 00:02:31,520 --> 00:02:33,359 Speaker 1: the margins are so much higher here than they are 53 00:02:33,400 --> 00:02:36,360 Speaker 1: at retail level from the Australian partners is because of 54 00:02:36,400 --> 00:02:38,679 Speaker 1: the cost of the reserve banks. That the Reserve Bank 55 00:02:38,680 --> 00:02:41,560 Speaker 1: gets whipped into shape, then presumably the margins squeeze as well. 56 00:02:41,600 --> 00:02:43,639 Speaker 1: So we'll look forward to that, won't we. For more 57 00:02:43,720 --> 00:02:46,800 Speaker 1: from the Mic Asking Breakfast, listen live to news talks 58 00:02:46,800 --> 00:02:50,000 Speaker 1: it'd be from six am weekdays, or follow the podcast 59 00:02:50,040 --> 00:02:50,919 Speaker 1: on iHeartRadio.