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MELBOURNE - Shares in Australia's major banks were pounded today amid fears the local lenders may reveal more write-downs related to bad debt.
As Australia's major indices touched new lows, with the benchmark S&P/ASX200 falling 128.2 points or 3.42 per cent to 3619.9, it was the financial sector
that was hit hardest.
Big falls on Wall Street on Friday pushed the local market lower this morning, IG Markets' head of dealing Oliver Stevens said.
The Dow lost 400 points in the last 40 minutes of trading to close at 8,497.31 points and futures have continued to fall overnight.
"We're calling the futures 160 points lower than where it closed ... and banks bear the brunt of it," he said.
Shaw Stockbroking's private client adviser Todd Kerslake agreed that Wall Street's falls had caused investor nervousness.
Today National Australia Bank (NAB) was trading at an 11-year low, down A$1.25 ($1.47) or 6.32 per cent to A$18.54.
Commonwealth Bank of Australia (CBA) had fallen AS$2.11 or 6.57 per cent to A$29.99 - a four-and-a-half year low.
ANZ Banking Group (ANZ) shares dropped 64 cents or 4.64 per cent to A$13.14, and Westpac Banking Corporation (Westpac) was down 64 cents or 3.81 per cent to A$16.16.
St George Bank lost 91 cents or 3.92 per cent to A$22.29, ahead of going ex-dividend tomorrow.
"Babcock and Brown's admission that they might have further losses will hurt the banks," he said.
The investment manager warned on Monday of a potential loss on its property joint venture with GPT Group associated with a US$112 million debt facility provided by Wachovia Bank.
As well, investors feared local banks had not disclosed all of their exposures to troubled companies.
"We saw last week there was a lot of pressure on them when they started announcing their exposures to ABC and Allco. There's a concern that they haven't been 100 per cent truthful, or not given the full extent of their exposures," Mr Stevens said.
"The more these diversified financials and property trusts are getting into trouble, the more it is bad news for the banks."
But Mr Kerslake disagreed, saying the market knew a lot of those write-downs were coming.
"The banks are oversold, and confidence needs to return to the sector before the buyers will," Mr Kerslake said.
The banks capital positions are extremely robust at the moment, he added.
- AAP
