FRANKIE DeGROOT | Local News | Contact
In a worrying indication of the state of the economy, Australia’s major banks have today admitted they are only prepared to loan money to those who don’t need to borrow it.
Under the scheme, loans will only be offered to customers who have not asked for one, whilst those who do request a loan will be automatically denied.
Already weathering the effects of record low interest rates, Australian banks have been hit hard by the effects of COVID-19, with a Return On Equity of less than 6%, roughly half of the ROE of previous years and less than the cost of capital at around 10%.
“This is just a logical reaction to the market conditions” explained bank manager Con Tsarkis.
“We need to reduce our exposure to high-risk lending, and the highest risk borrowers are the ones that don’t have any money. These are easy to identify because they are the ones that are asking to use our money; if they already had their own money they wouldn’t need to use ours. The type of customer we are actively seeking are those that have lots of money already. The real challenge is to get them to borrow money when they don’t need to.”
Loan applicant Tara Moolan says the new protocol has been extremely confusing.
“I was in the bank to deposit some business cheques when the teller asked me if I was interested in a loan. It was great timing because I was actually thinking about taking out a personal loan to replace my old car. But as soon as they heard that I really did want a loan they said I “wasn’t eligible.”
“So I asked about cashing in my term deposit to buy a new car and suddenly I was eligible again. It doesn’t make any sense. Although I feel like the bank is trying to shaft me somehow, which actually does make a lot of sense”.