banks in freefall

Big four banks tumble
Feb 6 18:19
Damien Lynch

ANZ Bank and National Australia Bank hit 15-month lows on Thursday, caught up in the volatility in global investment markets and concerns about debt provisioning.

Also caught up in the malaise were shares in Westpac and the Commonwealth Bank, which lost their early gains in late trading.

ANZ closed down 50¢ or 3 per cent at $16.41, having earlier touched $16.34, weighed down by analyst reports that it had about $130 million in exposure to troubled US energy giant El Paso. Its stock had dropped 33 in the two previous days.

"We can't comment on specific accounts," ANZ Bank spokesman, Paul Edwards, told afr.com. "But we have been closely following developments in the US energy sector for some time, so it's not unexpected. ANZ is still expecting international provisioning in 2003 to be lower than in 2002."

Thursday's market talk raised concern about ANZ's high level credit exposure across a wide range of countries and sectors.

ANZ Bank chief executive John McFarlane said in late October he expected the bank's provisioning against overseas corporate losses to peak at current levels, and start to come down.

ANZ's provision for doubtful debts in the 2001-02 financial year was $860 million compared with $531 million in 2001.

The bank revealed in late July that it had credit exposure of about $US131 million ($243 million) to troubled global telecommunications equipment and solutions group Marconi.

This came on top of exposure of about $170 million to Enron, representing three quarters of ANZ's exposure to the former US energy giant.

NAB's exposure to El Paso is estimated to be about $13 million, and its shares fell 80¢ or 2.6 per cent to stand at $30.55. These losses added to the 43 lost in the previous four trading sessions.

Of the other banks, Westpac was 40¢ or 2.9 per cent lower at $13.24, having declined 5¢1 in the previous three sessions. CBA lost 18¢ at $25.97 having shown signs for most of the session that it could rebound after hitting a 15-month low of $25.69 in late January on fears that it could write down the value of its Colonial First State funds management operations by as much as $2 billion when it reports next week.