Australia’s biggest banks are struggling to establish themselves in the global marketplace after a prolonged downturn.
The global banks’ annual report for the September quarter revealed the banks were facing mounting pressure from the start to find a sustainable business model.
With no obvious long-term plans, the banks’ inability to find any funding and a global slowdown in investment, it left them unable to compete in a global marketplace.
The banks reported they were still in the process of re-establishing their balance sheets and they were also facing an uncertain future, according to The Australian Financial Review.
“The challenges we’re facing today are systemic,” Chief Executive Officer Peter Watson said in a statement.
“The banks face a significant challenge in finding a viable business model and a sustainable growth strategy that can sustain the profitability of the business.”
It was only a matter of time before the banks had to cut costs, Watson said.
“We’re all about cost-cutting in the bank, so if you can find a way to reduce costs, it’s very difficult to do,” Watson said, according the Financial Review .
“But I would also argue there are times where it’s really good to cut things to reduce the risk of failure.”
The Australian Financial Services Association said the banks could have faced “unprecedented” losses, and the banks would have to make a “huge investment” to get back on their feet.
“It is critical that the banks continue to be able to meet their core mission of providing high-quality, affordable and accessible banking services to Australians,” the ANSA said in the report.
“They should be able, however, to operate with less disruption in the longer term, if the bank is able to maintain its core financial strength and financial stability.”
The banks’ failure to provide customers with a safe and reliable payment system has been a key concern for the banks, and many have been pushing to overhaul the way they operate.
In the past year, the Australian Federal Police (AFP) has issued more than 700 warnings to banks for their lack of compliance with financial reporting rules.
Australia’s financial regulators are now pushing banks to follow best practices.
The banks report showed that of the 12 Australian banks, three had been hit with more than $1 billion in penalties since 2015, and six had had to pay fines totalling more than A$6.3 billion.
In September this year, Fairfax Media revealed the Australian Securities and Investments Commission (ASIC) had fined one of the largest banks in Australia $3.5 billion for breaching its rules.
In February this year it was revealed the Reserve Bank of Australia had fined four banks $1.3 million for breaching financial reporting requirements.