Sydney, 13 May 2017
In today’s article, Banks and government must repair a broken relationship, the AFR has once again repeated the incorrect claim that “Macquarie loaded up on junk bonds after receiving Government support”. This is incorrect in two respects.
Firstly, the Government Guarantee was part of a co-ordinated response to the onset of the global financial crisis by G20 countries. In Australia more than 200 financial institutions were covered by the Government Guarantee. Those that used the Government Guarantee were required to pay a fee for doing so. Macquarie did not receive “government support” and was no different from any other Authorised Deposit Taking Institution (ADI) in Australia, and no different in that respect to any of its international banking competitors. Macquarie’s total loan assets in fact fell by approximately $1.4b during the period in which the Government Guarantee was in place. At 30 September 2008, shortly before the formal introduction of the guarantee in November 2008, Macquarie’s total loan assets were $30.9b - these had fallen to $29.5b at 31 March 2010 when the guarantee was closed to new liabilities.
Secondly, the lending book to which the AFR incorrectly refers to as “junk” is predominantly a diversified portfolio of senior secured loans that have numerous covenants and are secured against high quality assets.
Chief Financial Officer
Macquarie Group Limited