Reuters Australia
Australia's CBA says average costs of funds rising
Thursday July 24, 05:06 PM
By Mette Fraende
SYDNEY, July 24 (Reuters) - Commonwealth Bank of Australia Ltd (ASX: CBA.ax) (CBA) Chief Executive Ralph Norris said on Thursday the bank's average cost of funds was rising on a daily basis amid the global credit crunch.
The Australian banking sector was strong, with CBA well positioned thanks to its strong capital base, but the business environment had changed, Norris told reporters after a business lunch on Thursday.
The current challenging environment would last for at least another eight months, he added.
"The current environment has an ongoing effect on the funding costs...all of us need to be aware that time has changed," Norris said.
CBA, Australia's second-biggest bank by assets, on Wednesday said it was in talks to buy ABN AMRO's Australia and New Zealand operations, looking to strengthen its institutional banking and markets business.
"We are looking at all of ABN AMRO's activities...ABN AMRO has some areas of business which we don't have. We see that as an advantage," Norris said on Thursday.
He said due diligence into ABN's business started on Thursday.
ABN AMRO Australia Holdings, a unit of Dutch bank ABN AMRO, is estimated by analysts to have a value at about A$800 million ($777 million).
The unit is being sold by a consortium led by Royal Bank of Scotland RBS.L. On Tuesday, National Australia Bank Ltd (ASX: NAB.ax) dropped out of the race for ABN. (Reporting by Mette Fraende; Editing by James Thornhill)
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