Banker John Hughes says he has a list of “severe problems” with the banking system in Australia and he expects the banking industry to experience further problems with consumer credit in the next year.
“I have an absolute list of problems,” Mr Hughes said in an interview.
“And we have to face them.”
Mr Hughes, who also heads the Australian Banking Federation, said the issue of financial stability in Australia was “a complex and complex issue”.
“The banking industry is experiencing severe problems,” he said.
“There are no excuses.
There are no solutions.
There’s no certainty.
And I think that is the nature of the business.”
Mr Jones, who has been a chief financial analyst at the Commonwealth Bank, said his bank had made a number of “serious mistakes” over the past few years and had been forced to lay off staff.
“We have had to lay people off and make changes,” Mr Jones said.
He said the problems were more widespread than he thought and he believed “a lot of the problems we’re talking about are systemic”.
Mr Hughes said the banking sector was facing “severe challenges”.
“I think we are seeing the same problems that we have had over the last couple of years,” he told ABC Radio National’s The Week in Review program.
In October, the Australian Financial Review revealed that the Australian banking industry had made $13 billion of bad loans during the financial crisis.
Mr Jones said that the banking business was “pretty tough” in Australia because of the “risk” of the banking and financial sector.
“The way the banking is structured and the way the businesses are structured, we have a lot of risk and it’s not sustainable,” he added.
‘A whole lot of trouble’A number of senior Australian banks have recently reported significant losses and “significant” losses on their balance sheets.
Banks including the Australian Institute of Management (AIM) have already lost more than $5 billion in the past year, the Financial Review reported.
But Mr Hughes is confident that “this isn’t the end” of problems with the Australian financial system.
“[We] are in a pretty tough situation because we have such a large number of bad debts,” he noted.
As for the “huge amount of bad debt” that the banks are facing, Mr Hughes added that it was “quite a large amount”.
The problem is compounded by the fact that the big banks are “not able to really sell their excess reserves in a normal market environment”.
“[They’re] very worried about the future of the system,” he continued.
It is “quite clear” that “the banks are trying to sell their money at extremely low rates,” he argued.
And in a recent report, the US Federal Reserve warned that “credit markets may experience substantial volatility in the near term as a result of the credit environment”.