Monday , March 1 2021

Big Banks Distributed to SME Growth Fund: NAB, HSBC Leading, but ANZ, Westpac Cool

The main banks are divided between the federal government's efforts to set up a banking fund to invest in rapidly growing small companies and the National Australian Bank and HSBC were in charge of paying, while other major lenders were less interested.

According to government and banking sources, ANZ and Westpac are most reluctant to sign up for the proposed Australian Business Growth Fund, announced Wednesday by broker Josh Frydenberg.

The Australian Commonwealth Bank is less developed than NAB and HSBC in support of the proposal, but has informed the government that it can eventually join.

The Private Equity Growth Fund is intended to supplement a separate US $ 2 billion government-securitization fund for small and medium-sized enterprise (SME) loans from smaller banks and non-bank lenders to improve SME funding.

ANZ and Westpac most do not want to subscribe to the proposed Australian Business Growth Fund announced by the heir ...

ANZ and Westpac are most reluctant to sign up for the proposed Australian Business Growth Fund, announced by Treasurer Josh Frydenberg on Wednesday


The proposed bank-funded equity fund that takes small companies into promising SMEs is unusual, as banks usually lend their debts to customers rather than invest in small companies.


The Fund requires the Australian Precautionary Authority to rarely grant regulatory capital incentives to be economically viable and to avoid violations of disputes governed by the Australian Competition and Consumer Commission.

Analyst Nath chief of business and private banking, Anthony Healy, who consulted the government on politics, called for other banks to join.

"Highly supportive"

"We are very supportive and other banks should step up and commit themselves to developing the SME sector," said Healy, who visited London to explore a similar fund.

"If the fund is well-managed and diversified and you receive the right capital payment from the regulator, then it's a fairly rational decision to include funds in the fund."

NAB is the country's largest lender of SMEs and believes that there is a difference in the financing market for companies looking for growth capital, since pension funds and other potential shareholders do not usually invest in SMEs. As a result, SME owners can sometimes try to borrow more than they are wise and often are forced to seize their personal home as collateral.

The proposed equity capital fund is based on UK and Canadian models where governments granted capital relief to a special fund funded by large banks injecting equity capital to SME customers.

UK Growth Fund

HSBC has experience in the United Kingdom Growth Fund, created by five largest banks, which has invested 1.6 billion lats (2.8 billion USD) in more than 240 companies.

HSBC Australian Commercial Bank Manager Steve Hughes said: "Fast-growing mid-market firms need funding and often there is a difference between the level of loans that banks will provide based on factors such as cash flow security, assets available as collateral or the Track record. "

"The Entrepreneurship Growth Fund will offer another alternative, providing growth capital of $ 2 million to $ 25 million for private companies and boosting economic growth over time."

Some bankers believe that banks are better off lending money rather than riskier shareholder investments, such as private equity firms.

In 2012, ANZ closed an internal private equity fund, the ANZ Business Equity Fund, which paid more than $ 100 million to the bank.

ANZ's past capital investment in Asia was also not particularly successful. Browse shares is hard to relax and complicate the reputation of the bank, in particular its 25% stake in the AmBank of Malaysia, which is part of the corruption scandal involving the arrested Prime Minister Najib Razak.

Continue to get involved

Westpac's business boss David Lindberg said he will continue to work with the government to "better understand the proposed Australian Business Growth Fund and remain open to new policy ideas that will help accelerate the creation of new businesses."

Westpac has invested $ 150 million in venture capital support to the Reinventure Group to start new projects.

A spokeswoman for the Australian Commonwealth Bank said: "Small businesses are a critical part of the Australian economy, and we welcome all the initiatives that support this industry. We look forward to revising the details of the proposal in question as the main supporter of small and medium-sized enterprises in Australia."

It is understandable that Friedenberg believes that the fund can still be realized without joining all large banks.

Following the discovery of the bad behavior of the Hayne Commission in the financial services industry, the banks care for the government and promote better public relations, so they will be forced to support the government's proposal.

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