Another Australian bank is at it again, this time it is a report that the Commonwealth Bank of Australia [ASX:CBA] may look to buy Perth based BankWest [http://www.theaustralian.news.com.au/story/0,25197,24197033-601,00.html] which is currently owned by UK bank HBOS [LON:HBOS]. There has been plenty of talk in recent months that HBOS would be keen to offload the bank to raise capital due to its exposure to the falling housing market in the UK.
This is the latest in a spate of takeovers initiated by Australian banks, yet it is only the Westpac/St George deal that appears to have a better than 50/50 chance of succeeding. Only last week the CBA pulled out of talks to buy the Australian investment banking assets of Royal Bank of Scotland’s ABN Amro, and recently the NAB got cold feet and pulled out of buying Citibank’s stockbroking business.
To be fair, BankWest would likely be a much better fit than ABN Amro for CBA. Merging a retail banking and lending business into the CBA should be a much easier proposition than trying to absorb the ultra egos of investment banking. In addition, investment bankers and analysts are much more likely to walk out the door taking client books with them than retail bankers.
Nuclear NiCoal?
Is nuclear power generation going to be back on the agenda only months after it was all but ruled out by the Rudd federal government? It doesn’t seem likely, but Nicole Hollows, CEO of Queensland based Macarthur Coal [ASX:MCC] seems to think so according to a report in today’s Australian Financial Review.
“It is inevitable, because solar and wind are not going to get there. I think it will happen in the next 10 years… Nuclear really is the elephant in the room. People see it’s [a choice between] either coal or [reducing] carbon – but the alternative to fill that gap is nuclear.”
So, do we think Ms Hollows is serious about the prospect of nuclear power generation in Australia, or is there another agenda? The second option is probably the most likely, for two reasons. First would be the desire for the coal industry to get hold of additional funding (subsidies) for further development of clean coal technologies. The second, as the AFR reports, would be to strong-arm the Queensland government into improving coal infrastructure projects in the state.
But how about a third possibility, that Macarthur Coal may be keen to diversify its interests into Uranium mining. Currently Uranium cannot be mined in Queensland, however there is nothing to stop miners from prospecting for it.
Dollar Discounted
In the last four weeks the Australian dollar has gone from being almost at a par to the US dollar to now trading at a level not seen since… January of this year. That has seen the Australian dollar fall by over 10% as the market starts to factor in a number of events including the US raising interest rates, Australia dropping interest rates, and the end of the commodities boom due to slower growth in China.
This isn’t the first time that the Aussie has fallen so dramatically against the Greenback, and it won’t be the last, but it is probably too soon to claim categorically that the weakening of the US dollar has come to an end. After all, there appears to be very little that has actually changed in the last few weeks, so it can only be based on a forecasted change in circumstances.
If the markets begin to reassess these forecasts then there is little to stop the Aussie dollar from continuing on its march northwards again.
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