On November 30, 2017, major banks were seen to move on losses while falling prey to Royal Commission into the financial sector. The properly constituted inquiry is expected for a term that is no longer than 12 months with a final report due in February 2019. This news has led the big four banks to slip with ANZ plunging 1.1%, Commonwealth Bank down 1.9%, and Westpac down 0.03%. Other financial sector stocks also felt the jitters with Bendigo and Adelaide Bank, Bank of Queensland and Macquarie Group losing during the early trading.
Primarily and owing to the mounting political pressure, the federal government and the banks have agreed on a royal commission into the industry. Thus, the Royal Commission, as announced by Prime Minister Malcolm Turnbull and Treasurer Scott Morrison, is aimed at managing the scenario which was otherwise impacting the sector and the overall economy. It has been specifically highlighted that only the government can ensure that a royal commission is created, established with respected and capable commissioners. The government has been also advised by the Governor of the Reserve Bank and the chair of APRA of the economic damage being caused by the speculation about an inquiry. The measure thus seems to curb the use of financial institutions and services as a political football. As of now, about $75 million have been allocated for the commission to investigate the banks, and other financial institutions including superannuation providers and insurance companies.
The key thing to note is that the major banks were seeking a secured scripted Parliamentary inquiry but landed into an open ended royal commission. As of now, the banks including CBA, NAB and ANZ have acknowledged that a Royal Commission had been announced without much commentary from their end.
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