Tuesday 14th October 2008
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The reliance of Australia's banks on offshore funding means "they have not escaped the funding pressures affecting many banks around the world," said John Miles, a director at Fitch, said in a statement. The government proposal "aims to address these pressures by restoring banks' access to offshore wholesale funding markets."
Australia has followed the US and Europe in offering support to its banking system, part of global efforts to shore up confidence in financial markets. Australia went a step further than New Zealand by guaranteeing wholesale deposits between banks.
Bank stocks rallied on the ASX. ANZ Bank gained 5.9% to A$18.30. In the past 12 months it has dropped 51%. Commonwealth Bank rose 4% to A$43.88 and has declined 32% in the past 12 months. National Australia Bank advanced 8.4% to A$24.27, paring its 12-month slide to 50% and Westpac Bank rose 3.4% to A$22.70, trimming its drop in the past year to 32%.
Australian banks haven't reached the stage where the government needs to buy equity stakes to ensure their survival, as has been the case in Europe and the US, Fitch said.
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