ANZ interest rates calls independent of the RBA a public relations disaster that won’t last

ANZ interest rates calls independent of the RBA a public relations disaster that won’t last
ANZ interest rates calls independent of the RBA a public relations disaster that won’t last

Today's expected RBA interest rate cut will once again be followed by speculation about what ANZ will do when it makes its independent interest rate decision 10 days later on Friday, May 11.

Since making the decision to go it alone, following the December 0.25-percentage-point rate cut, ANZ has been on a public relations crusade to explain and justify why it should make its own interest rate call independently of the RBA and why it has needed to raise interest rates twice (by six basis points each time) since December without prompting from the RBA.

Last week ANZ Australia CEO Phil Chronican wrote an entire column in the Fairfax media explaining why the bank needed to go it alone on interest rate announcements, including highlighting the fact that less expensive funding had matured and was replaced with “more expensive funding reflecting the current conditions in global markets”.

Chronican acknowledged “for most people this sounds complex” and that “many people have strong views about these decisions”, but he said it was “difficult to have an informed public debate about these issues when people of influence in the community are not aware of key facts or are willing to misrepresent them”.

While Chronican may be correct about ANZ’s funding position being misrepresented by “people of influence”, what is clear is that his attempt to explain the bank’s position is falling on deaf ears, with the bank taking all the heat each time interest rate announcements are made by the RBA.

Perhaps Fairfax business columnist Adele Ferguson said it best when she said the decision by ANZ to lift rates independently by six basis points on April 13 made it stand out “like a shag on a rock” after the other major banks did nothing.

Indeed, ANZ appears to be making few friends, regardless of how hard it tries to explain itself or how many colourful charts it includes in its monthly interest rate review statements.

Research carried out by social media monitoring company sentimentmetrics.com.au has found that negative sentiment towards ANZ went from 12% in the four weeks prior to its interest rate announcement to 19% following the announcement.

The public relations problems faced by ANZ were highlighted, somewhat tongue-in-cheek by Marcus Padley, founder of the Marcus Today stock market newsletter, who said the bank was getting “a lot of flak for no upside”.

“Every second Thursday of the month (before the Friday announcement), the ANZ board must be saying, ‘What are we doing here again?’” Padley said on the ABC’s Inside Business program.

“ANZ is the second cheapest of the major banks, but you would think they are nastiest bank out there,” he added.

Padley reckons the ANZ independent meeting on the second Friday of every month won’t last.

“It’s a seasonal thing to do with the GFC. Once everything relaxes, they’ll fall back in line with the RBA.”

Inside Business host Alan Kohler said the bank might be raising interest rates just to keep the public informed that it is making independent rate calls – certainly not a reminder that will be welcomed by any borrowers.

Also speaking on the same program, Crikey founder and Australian Shareholders' Association director Stephen Mayne said ANZ might get better PR if it announced an independent rate cut.

Nobody is likely to be holding their breath on that one.

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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