Ask This Question :- "How Safe Are The Australian Banks ?"

Be prepared to short the banks! In particular, CBA and Westpac.

• 50% of Australia’s mortgage market is held by CBA and Westpac, 25% are held by ANZ & NAB (see CoreData’s Australian Mortgage Report Q1 2010)
• As at December 2009, 60% of CBA’s lending books are mortgages. 50% of Westpac’s lending books are mortgage.¹ Both figures are set to continue to grow.
• Look at CBA 2009 annual report—Leverage ratio is almost 20 times (total assets of $620.4 billion against $31.4 billion of equity). Of $620.4 billion of assets, $473.7 billion are loan assets. If around 6.6% of CBA’s loans go bad (any loans, not just mortgages), 100% of its shareholder equity will be wiped out!!²
• Australia’s banks have $13 trillion of off-balance sheet liabilities, according to RBA’s figures!³

In 2008, The Australian reported¹, The Reserve Bank of Australia has a dark worry about our banks: they get 90 per cent of their cash from each other. If one bank gets into trouble, the Australian financial system could be snap-frozen overnight.