Australia’s crackdown of the banking sector continues, this time with regulators’ latest probe into financial institutions’ (FIs) lending practices with small farmers.
The inquiry begins this week, according to Reuters reports on Monday (June 25), and was announced the same day Commonwealth Bank of Australia (CBA) said it would spin off its wealth management and mortgage brokerage operations in a massive de-merger, Bloomberg said.
Commonwealth Chief Executive Officer Matt Comyn, nearly three months into the role, is working to boil the bank down to targeted services after selling off its life insurance unit AIA Group last year.
The bank is also continuing to review its general insurance unit — and the bank could be headed for further sales.
Shares in CBA on Monday slid 2.4 percent following the announcement, although Bloomberg noted that the assets being sold off represented only about 5 percent of the bank’s net income in 2017.
Commonwealth’s overhaul comes at a time of turbulence for the nation’s banking industry as a whole. Regulators are probing the industry’s conduct with small business lenders, and all four of its top banks — Commonwealth, Westpac, Australia and New Zealand Banking Group and National Australia Bank — admitted wrongdoing in May.
Now, authorities are reportedly launching a more targeted inquiry into how lenders treat the agriculture industry.
According to Reuters, as shareholders press the agriculture industry for greater profits, rural bank branches are closing, and small farmers are feeling squeezed from “city executives with little care of issues beyond their control, such as drought, wildfires and trade disputes.”
As a Royal Commission begins its probe, a report by the Senate released last year included recommendations that called for a minimum waiting period before lenders can call on distressed loans issued to agriculture businesses, as well as a ban on lenders changing terms on rural loans without notice.