BANKS’ CREDIT POLICIES

Sydney, 2 April, 2004:  The Australian Bankers’ Association (ABA) said that, where banks have changed housing lending criteria, that would be a normal response to changes in the investment housing market environment.

David Bell, Chief Executive of the Australian Bankers’ Association, is responding to media reports today implying that banks were inappropriately tightening credit policies.

“All deposit-taking institutions must ensure they are properly identifying and managing credit risk. The Reserve Bank has over recent times been warning about the potential downturn in some investment property markets.”

Banks are subjected to prudential supervision by the Australian Prudential Regulation Authority (APRA). APRA requires institutions to have in place sound risk management policies and processes.

While APRA’s recent “stress” testing[1] of bank housing portfolios showed that banks are in strong financial positions, lending policies must be flexible enough to adjust to changed circumstances.

For further information:

Heather Wellard

ABA Public Relations

Phone: 02 8298 0411

Mobile: 0409 830 439

ENDS