AFR columnist James Thomson, in conversation with Mr Comyn, asked the CEO to reflect on what Australian bankers can learn from the overseas turmoil.
“Some of the things that have been going on in the US … are unusual, and very different to the Australian market,” said Mr Comyn, citing securities as an example.
“There are very different capital rules [in the US], particularly around how securities are valued,” he explained. “[In Australia] we have to mark to market all of our securities on a regular basis. For the big banks in the US, they only have to value what's known as ‘available for sale’, not ‘held to maturity’. And the smaller banks have to do neither.”
These different rules create very different conditions for banks in Australia compared to their international counterparts.
“[Commonwealth Bank is] the most well-capitalised large bank in the world. I think the four Aussie majors would be four of the top five,” Mr Comyn said. “We’re holding, relative to pre-GFC [the Global Financial Crisis], two-and-a-half times more capital even after we scale the balance sheet for growth over that time.
“We've got the lowest proportion of short-term wholesale funding,” he continued. “So that's 7 percent. It used to be 25 percent, pre-GFC. Our tenor of long-term wholesale funding has gone from 3.6 years to 5.8 years. We've got four times as many high-quality liquid assets as we had pre-GFC.”
Mr Comyn described Australia’s regulatory environment as “extremely strong” — which does incur costs of billions of dollars to Australian banks, but “there’s nothing out there that’s not without costs”.
“My guess is a lot of the decisions that were made in the US banking were actually about making it easier for smaller banks to compete by not imposing higher regulatory and therefore costs of that,” Mr Comyn speculated. “Which is fine almost all the time, until it's absolutely not.”
Mr Comyn concluded by asserting that the “extremely strong” position of the Australian banking system is globally unique.
“There are other risks that can always manifest and I think both consumers and our stakeholders, including government and shareholders, should take a lot of comfort from that [strong position of Australian banks], because that's our job to support customers and the broader economy," he said.
Banner image: James Thomson and Matt Comyn at the Australian Financial Review Banking Summit (Photographer: Peter Rae)