ANZ lags in writing SME ‘coronaloans’

Financial Review,
ANZ Bank has written fewer than 5 per cent of the loans that have been approved under a scheme designed to get cheap government-backed money into the hands of struggling businesses.

The Melbourne-headquartered big four bank ticked off just 702 Coronavirus SME Guarantee (SMEG) loans from the 14,775 loans that were approved across the sector, according to data to early June provided to the House of Representatives economics committee.

ANZ’s Shayne Elliott: “We much prefer that we can get people through the normal process.” Alex Ellinghausen

ANZ chief executive Shayne Elliott defended the bank’s record of lending to SMEs during his appearance at a parliamentary hearing on Friday, saying the bank’s low take-up of the scheme was not reflective of its support for the sector and it was doing so via different means.

“Not only have we increased it in aggregate terms but … we’ve increased it faster than the market average, and, of the majors, we’ve had the fastest growth in that lending. So I think that speaks for itself,” Mr Elliott said.

The government’s SMEG loan program has been plagued by poor take-up, with just $1.7 billion in loans to 17,652 businesses since the $40 billion funding initiative was announced in March.

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Updated: Sep 9, 2020 – 4.02pm. Data is 20 mins delayed.

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WBCWestpac Banking Corporation

$17.07 -3.34%

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NABNational Australia Bank

$17.44 -2.57%

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CBACommonwealth Bank

$66.79 -2.48%

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Treasury is part-way through a consultation process with industry on how to improve the scheme, which is due to be relaunched on October 1.

While 44 lenders have been approved to use the scheme, smaller players have complained of the uneven playing field created by the Term Funding Facility, a pool of cheap money established by the Reserve Bank which loans funds at 0.25 per cent to authorised deposit-taking institutions.

Mr Elliott said the bank viewed the SMEG as backstop. The bank preferred to put customers through the normal lending system before putting them through the SMEG program, a process which Mr Elliott said was “healthier”.

“For some customers, where it is a bit more of a struggle, where they may not make it through the normal process, we can draw on the SME guarantee scheme,” Mr Elliott said.

“The customer doesn’t get a benefit. There’s no benefit. If I lend you money, whether or not it’s half guaranteed by the government—from the customer’s point of view—isn’t really terribly relevant.”

ANZ was not the only bank to have little appetite for the loans, with Australia’s second-biggest bank, Westpac, approving 1484 loans, or 10 per cent of the total. Australia’s fifth-largest bank, Bendigo and Adelaide Bank, had approved just 31 loans or 0.2 per cent of the total.

Commonwealth Bank and NAB have written 85 per cent of all loans approved under the program. The most recent data from the banks has CBA approving around 9000 loans with NAB approving another 6087, from a total 17,652 loans, according to the latest update from Treasury.

However, the data provided to the House economics committee also revealed that although Commonwealth Bank had written more than half of all loans issued under the program, small businesses were more likely to be successful with an application submitted through SME lending specialist NAB.

CBA reported receiving 22,449 applications for funds under the scheme as of early June but had approved just 7633 loans, or one out of every three applications. NAB reported receiving 5880 applications and approved 4841 loans, or four out of every five applications.