NAB hikes rates for IO loans

The rush to hike interest only loans continues, with NAB announcing changes which mirror the other majors. A small reduction in OO P&I loans but a big hike for IO loans for both OO and investors. Net impact will be further margin repair. No link with the bank levy they say.

From Australian Broker.

NAB has today announced changes to its variable home loan interest rates, effective Friday 30 June 2017.

The following three changes have been announced:

  • The interest rate for owner occupiers making principal and interest repayments will decrease by 0.08% per annum, to 5.24% per annum
  • The interest rate for owner occupiers making interest only repayments will increase by 0.35% per annum, to 5.77% per annum
  • The interest rate for residential investors making interest only repayments will increase by 0.35% per annum, to 6.25% per annum

NAB Chief Operating Officer, Antony Cahill, said the reduction to NAB’s Standard Variable Rate will benefit around 80 per cent of NAB’s owner occupier home loan customers.

“The 0.08% per annum decrease will see owner occupier customers making principal and interest repayments save $14 each month, or $168 each year, and help them to pay off their home loan sooner,” Cahill said.

“We need to comply with our regulatory requirements, including APRA’s 30% limit on new interest only lending for residential mortgages, while balancing the needs of customers across our entire portfolio and continuing to provide competitive rates.”

Cahill acknowledged the impact these changes will have on home loan customers making variable interest only repayments. Borrowers will not incur a fee to switch their repayments to principal and interest; customers are encouraged to discuss variations to their home loan with their banker or broker.

NAB continues to offer first home buyers a special 3.69% per annum, fixed for two years.

“We’re pleased to continue to help Australians, particularly young Australians, wanting to enter the property market to achieve their home ownership dreams,” Cahill said.

From Friday 30 June 2017, NAB’s advertised variable rates will be as follows:

Current advertised rates Advertised rate (Friday 30 June 2017)
Owner Occupier P&I 5.32% p.a. 5.24% p.a.
Investor P&I 5.80% p.a. 5.80% p.a.
Owner Occupier IO 5.42% p.a. 5.77% p.a.
Investor IO 5.90% p.a. 6.25% p.a.

NAB has said the changes announced today are unrelated to the Federal Government’s Major Bank Levy.

 

 

NAB’s opening address – Senate Economics Legislation Committee on Major Bank Levy Bill

NAB’s address mirrored the ANZ approach. Whilst accepting the tax will be implemented, they call for a sunset clause, extension to foreign banks operating in Australia; and a review of implementation after 18 months. They also make the point the tax cannot be absorbed.

We are pleased to appear before you to discuss the major bank tax.

While limited, this Senate Inquiry is an important process and one that NAB and our Chairman Ken Henry has advocated for – to ensure transparency and a greater understanding of the consequences of this tax.

With me is our Treasurer Shaun Dooley. I will make a short statement and then we are both happy to take your questions.

Banking plays a vital role in the strength and stability of the Australian economy.

This has been well understood by governments in the past.

Historically, we’ve had constructive engagement on significant policy reform which has allowed everybody to fully understand the impact on bank customers, our business and the economy.

As Treasury Secretary John Fraser told this Committee just last month: “any rapid policy change or uncertainty can affect the confidence of businesses and consumers and this in turn can undermine growth”.

The major bank tax is rapid policy change and has created real uncertainty.

There are four key points that are central to our concerns:

Firstly, the lack of consultation and rushed process has contributed to the development of poor tax policy that will affect every Australian.

While the UK bank tax was introduced under vastly different circumstances, consultation with the industry there extended for three months.

In contrast, the major Australian banks had about 40 hours to provide submissions based on the draft legislation.

As a result, many questions remain. The impact on the economy is still not fully known and there will be unintended consequences that will need to be addressed.

Secondly, it has repeatedly been stated that the tax can be simply “absorbed” by the banks. No cost, such as a tax, can be absorbed by any business – it must be passed on somewhere.

Based on what we know to date and applied to NAB’s business as it stands, we estimate the cost of the bank tax on NAB would be around $350 million annually pre tax, or $245 million post tax.

No decisions have been made on how NAB will manage this additional cost. But the cost will be borne by one or a combination of these groups: our customers – borrowers and savers – our shareholders, our suppliers or our employees.

Thirdly, the inefficient design of this tax places the impacted major Australian banks at a competitive disadvantage in wholesale markets that are critical to a well-functioning economy.

In these markets the Australian banks compete against large and profitable global institutions that are not impacted by the tax – because their domestic liabilities do not exceed the tax’s $100 billion threshold.

And lastly, we need to be clear about the purpose and impact of the tax to ensure confidence in the Australian banking sector.

Offshore investors have voiced their concerns about the tax and what it says about relations between the Australian banks and the Government.

This is due to the surprise nature of the intervention and the “shock” it created – coupled with the lack of a clear explanation and apparent conflict with previous regulatory guidance.

Confidence in the Australian banking sector is vital to ensure Australia has access to off-shore funding and capital.

These global investors have choice as to where to invest their money and the lack of clear policy rationale has been of concern, and goes directly to confidence in our market.

Senators, we accept that this tax will be implemented. However we strongly urge you to consider the following three points:

A sunset clause so that when the Budget returns to surplus the tax is removed;

To widen the tax to include international banks operating in Australia; and

Commit to a review of the tax within 18 months of implementation to fully assess its impact and any potential unintended consequences.

IOOF to acquire National Australia Trustees Limited

National Australia Bank Limited will divest National Australia Trustees Limited (NATL) to IOOF Holdings Limited (IOOF). This continues the retreat by the big banks from services which once were seen as customer relationship building but now are being sidelined by the evolution of online distribution, and the quest to boost their capital levels. This is leading to a focus on “core banking”.

According to Bloomberg, National Australia Trustees Limited operates as a statutory trustee company. The company acts as trustee, manager, executor, and agent, as well as engages in other associated activities. Its services include estate planning, estate administration, compensation trust, corporate trust, and personal asset management services.

IOOF’s trustee business, Australian Executor Trustees (AET), is one of Australia’s largest and most experienced specialist providers of estate and trustee services. National Australia Trustees is a significant provider of trustee services with a recognised history in Western Australia, New South Wales, Queensland and Victoria.

IOOF Managing Director, Christopher Kelaher, commented, “National Australia Trustees’ offering is a strong strategic fit with our existing trustee business. This acquisition demonstrates our commitment and belief that all Australians should have access to professional trustee services as part of their wealth planning to support their financial independence and provide them with peace of mind.”

“IOOF’s AET business is a leading trustee operator and this agreement will lead to improved outcomes for our combined customers who will benefit from greater scale and more specialist product offerings.”

National Australia Trustees CEO, Andrew Rimmer, said, “This is the right outcome for our customers and follows a strategic review by NAB of the NATL business.”

The acquisition of NATL means IOOF will become one of Australia’s largest compensation trust providers and this will further enhance both IOOF and AET’s national presence in offering specialist trustee services.

Completion of the sale is subject to regulatory approval and is expected to be finalised in the next few months.

Mr Rimmer said that, “During this period, National Australia Trustees will be working closely with IOOF to ensure the successful transition of staff, systems and customers.”Mr Kelaher added, “Both IOOF and NATL are committed to client service excellence and look forward to working together to ensure a smooth transition and continuation of superior client service.”

NAB Ventures backs Sydney start-up, Basiq

Basiq, a start-up that provides Australia’s first open banking API platform, has gained investments from NAB Ventures and Reinventure in a seed funding round.

Based in Sydney, Basiq’s core platform enables fintech companies to securely acquire authorised financial data on behalf of their customers. This enables fintechs to develop innovative solutions for their customers around things like personal finance management, wealth management and income verification.

Basiq launched in early 2017 and is unique in the Australian market with a product that provides easy integration, great developer experience and a pay-as-you-go pricing model.

“Basiq’s fundamental mission is to enable innovation in the fintech space. By providing a platform that delivers core banking functionality through a set of secure and easy to use API services the opportunities and possibilities of what can be created are endless,” Founder Damir Cuca said.

“A key part of realising this vision is to work with existing financial institutions and fintechs and be the bridge between the two. The institutions provide the regulatory discipline and the core systems, and the fintechs provide the speed of innovation.

Managing Director NAB Ventures, Todd Forest, said: “The way financial institutions use and share data continues to be an area of focus as banks look for ways to provide improved products and services for their customers.

“Over a number of years NAB has invested in secure API technology and looked for ways it can be used to deliver improved experiences for our customers by effectively and safely using data.

“Basiq is still in its early stages, but it is developing a dynamic technology platform; as they grow and develop their platform and tech capabilities we hope this relationship will help provide us with valuable insights and opportunities for future innovation.”

General Partner Reinventure, Kara Frederick, said: “Damir is a repeat founder with a unique ability to balance the sophisticated requirements of financial institutions with the pace and specialisation of fintechs. The result is that Basiq’s platform enables an ecosystem of tailored and secure solutions that banking customers want.

“Through this investment, Basiq will help to open up a world of fintech end-to-end solutions, some of which we anticipate – like the digitisation of the traditionally manual mortgage application process – and many of which are yet to be discovered.”

-Notes-

About NAB Ventures

NAB Ventures was established in January 2016, as the venture capital arm of National Australia Bank (“NAB”). NAB Ventures is a global initiative supporting entrepreneurs in Australia and offshore in their quest to build leading technology companies. NAB Ventures’ partners, Todd Forest and Melissa Widner, have founded, led, and invested in technology companies for two decades in both Australia and the US. NAB Ventures invests in founders that can leverage NAB’s expertise, assets and market position, to scale both within Australia and overseas. To learn more about NAB Ventures visit: www.nabventures.com

About Reinventure

Reinventure is an Australian venture capital fund whose largest investor is the Westpac Banking Corporation, one of Australia’s largest banking and financial services companies. Reinventure’s primary objective is to bring great entrepreneurs together in a partnership opportunity with Westpac. As a result, Reinventure helps ventures to scale more rapidly than they could do on their own. Reinventure makes investments from seed to Series B. Reinventure was co-founded by Danny Gilligan and Simon Cant, and is managed along with partner Kara Frederick. The partners are also fund co-investors. Reinventure funds total $100 million across Fund 1 and Fund II and include 15 portfolio companies and growing. To learn more about Reinventure Group visit: www.reinventure.com.au.

NAB Announces Collaboration With Global Equity Crowdfunding Platform

NAB has announced an innovative collaboration with Israeli company OurCrowd, a leading global equity crowdfunding platform that will provide NAB clients with direct access to exclusive OurCrowd start-up investments together with domestic and global networks and events.

The first of its kind in Australia, the collaboration provides direct access for NAB clients to one of the world’s largest equity crowdfunding platforms, which raised more than A$600m from approximately 20,000 investors across 112 countries for over 120 early stage companies.

The announcement was made by OurCrowd CEO Jon Medved at the Australia-Israel Chamber of Commerce Women Leaders Delegation in Israel.

NAB Private Executive General Manager Christine Yates, one of the delegates, welcomed the collaboration and said it was another example of NAB deepening its relationship with its clients and offering innovative solutions for a changing environment.

“We know that our clients are looking globally for investment opportunities, and OurCrowd is an established global platform which offers a full service end-to-end solution,” Ms Yates said.

“Technology is changing the way we do business and this shows how NAB is thinking differently when it comes to servicing our clients. Our NAB clients will have access that is not available outside this collaboration.”

OurCrowd entered the Australian market in 2014 and has positioned itself as a leading provider to the local market of global alternative investment opportunities.

Managing Director, OurCrowd Australia and Asia Dan Bennett said: “the collaboration provides NAB Private clients a high quality globally focussed product with particular scope in USA, Israel and Asia-Pacific.

“We are excited about this venture with one of Australia’s leading Private Banks and sharing the very best of global technology investment with their deeply valued clients,” Mr Bennett said.

NAB is a top 30 global bank and Australia’s leading business bank and employs over 34,000 people. NAB serves individuals and business customers ranging from small and medium enterprises through to Australia’s largest institutions. Outside of Australia, NAB also supports businesses across New Zealand, Asia, the UK and the US to link with the Australian market.

OurCrowd is the leading global equity crowdfunding platform for accredited investors. Managed by a team of seasoned investment professionals and led by serial entrepreneur Jon Medved, OurCrowd vets and selects opportunities, invests its own capital, and brings companies to its accredited membership of global investors.

OurCrowd provides post-investment support to its portfolio companies, assigns industry experts as mentors, and takes board seats. The OurCrowd community of almost 20,000 investors from over 112 countries has invested over A$600M into 120 portfolio companies and funds. OurCrowd already has thirteen exits to date, two IPO’s and eleven acquisitions.

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.