Australia's four biggest lenders on Monday launched a strongly worded attack on the government's new levy on big banks, estimating almost A$1 billion (US$745.00 million) in additional annual costs between them.
Westpac expected to take a $260 million annual cost hit after tax as a result of the levy, it said on Monday, while CBA estimated its levy cost would be $220 million a year after tax and NAB warned it would face a $245 million bill after tax.
Australia's so-called Big Four banks are very well capitalised and extremely profitable.
The levy - a surprise announcement in this month's budget - has infuriated the big five banks, who argue they are already Australia's highest taxpayers. "No company can simply "absorb" a new tax, so consideration is being given to how we will manage this significant impost".
"It places the major banks at a competitive disadvantage relative to global peers and it is a tax on growth because as lending and investment increases the cost of the levy also rises", Westpac says.
But it is unlikely to withdraw support for the law if the inquiry is not extended to the foreign banks.
'We know they will be tough'
Japan will be reunited with the Scots, who they lost to as they exited in the pool stage in 2015. New Zealand will face South Africa in the upcoming 2019 RWC pool stage along with Italy .
In effect then ever since the GFC Australia's banks have been able to borrow at better rates thanks to the government's liquidity backstop, while also lending out more than $1 trillion at super profitable returns with bad debts at record lows.
However, the big four - ANZ, Commonwealth Bank and National Australia and Westpac - were not included in this mass downgrade on S&P's assumption that the government would support them if necessary.
"The exact cost will depend on the final form of the new legislation passed and the composition of Westpac's liabilities", the bank noted in its statement to the ASX. Westpac said the tax was "inefficient", while NAB said the tax could not be absorbed and could affect profitability. We plan to consult with stakeholders, including shareholders, on the Levy.
Westpac paid a total $1.88 in dividends per share while making a $7.8 billion full-year profit in 2015/16, and said the $260 million charge works out as eight cents per security. On an annualised basis, that represents a cost of around $370 million or around $260 million after tax.
Global rivals would not be subject to the levy, although HSBC is subject to the equivalent United Kingdom scheme.