Key Points:
- Big four bank exposure to Australian resources industry has fallen 37% to decade low
- Erosion of technical nous and risk appetite means these banks will struggle to support the next boom in future facing commodities
An article by prominent resources reporter Peter Ker published in today’s Australian Financial Review newspaper has drawn attention to recent analysis by Bridgend Capital Advisory on declining support for the resources industry by Australia’s major commercial banks and implications for the next resources boom.
Bridgend’s co-founder Nick Rees is quoted in the article saying:
“The whole industry is talking about this next wave coming and I think there is an assumption that if that were to materialise into significant demand for capital, that things might just play out like they did last time. But I am just not confident the [Australian] banks are in the same position they were in 10 years ago to be able to support it. That $25 billion in exposure that has gone since 2015. I don’t see a significant portion of that coming back.”
Follow the link below to read the AFR article in full.
For a deeper dive into this issue and implications for the resources industry, read Bridgend’s Insight Article “Can the Resources industry still bank on support from Big 4?” available at the link below.
