Monday 2 December 2013

The great withdrawal

Does anyone remember the late 90's when banks were fleeing their communities in savage cost cutting exercises? With the raging of the radio shock jocks as bank chiefs were quoted asking what people were complaining about (and this was before online banking had taken root)?

Well the shrinking of Aussie banking is starting again, this time at the fringes of the (now slowing) mining boom:

In order to lessen the chance of borrowers defaulting on their loans, Australia’s major banks are reassessing their exposure to risky mining towns as rental yields in some areas have become “not sustainable”.
During the height of the resources boom, demand for home loans and rental properties was enormous, however, as construction spending declines and the miners become more cost-effective with less working capital, that demand for accommodation drops making yields unsustainable (here).

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