, could see the major Australian banks favour deposit funding over issuing new bonds to offshore investors.
“However, conditions in global bond markets have been strained recently following the failure of Silicon Valley Bank in the United States.” Macquarie banking analyst Victor German said Australian banks had substantially improved their funding and liquidity positions in the last 15 years. Mr Sproules described the repayment of cheap TFF debt as a withdrawal of liquidity from Australian banks, suggesting this may now be tougher to plug with funding from global debt investors.While poor risk management “may have hastened the decline of SVB, the root cause of the event appears to be the withdrawal of liquidity,” Mr Sproules said.
The RBA said funding task related to the refinancing of the TFF is “sizeable but manageable” in an RBA Bulletin article last week. “Volatility in Australian financial markets has picked up, but markets are still functioning and, most importantly, Australian banks are unquestionably strong – the banks’ capital and liquidity positions are well above APRA’s regulatory requirements,” Mr Kent said in his speech on Monday.“Banks are already well advanced on their bond issuance plans for the year and could defer their bond issuance for a while.