ACCC gets industry buy-in to fast track funding for small lenders

  • By Christine St Anne

The ACCC has sough buy in from of the Australian Securitisation Forum to help administer the government’s $15 billion Structured Finance Support Fund.

The federal government set up the Structured Finance Support Fund (SFSF) in March to help smaller lenders access funding and competitive prices amid the liquidity challenges from the impact of COVID-19.

To date, Judo Bank has managed to secure $500 million from the fund.

The fund is managed by the Australian Office of Financial Management (AOFM), which will invest in wholesale funding markets used by small lenders to finance loans.

The ACCC has authorised the ASF and its members to discuss how the AOFM should administer fund, including providing their views to the AOFM about developing measures for issuing new debt, arranging appropriate funding arrangements, allowing for hardship relief for borrowers and ensuring the continued flow of funding to smaller lenders.

The ASF is the industry body for participants in securitisation and covered bond markets in Australia. The ASF’s members include both bank and non-bank lenders, investment banks, investors and service providers such as trustees, accountants and lawyers.

“The Structured Finance Support Fund is likely to be more quickly and effectively implemented when members of the ASF are allowed to work together to support the AOFM in administering the fund,” ACCC chair Rod Sims said.

“Many Australian smaller businesses and individuals rely on small lenders. Quick and effective implementation of the SFSF will help ensure that small lenders can continue to support these businesses by offering affordable credit during this very difficult time,” Sims said.

“It’s also crucial that competition in the loans market in Australia is maintained. The competition provided by small lenders needs to be supported to help mitigate the economic impact of COVID-19,” Sims added.

The move follows the comments outlined on Tuesday by the Reserve Bank of Australia governor Philip Lowe who said that banks were now starting to access its $90 billion Term Funding Facility.

Under this funding facility, the central bank would provide a dollar of funding for each dollar of new lending to large businesses and five dollars for each additional dollar of lending to small businesses.

“This facility will help lower funding costs across the banking system and provides an incentive for lenders to support credit to businesses, especially small and medium-sized businesses,” Lowe said.

It is understood that at this stage the smaller banks have accessed the TFF given they have higher funding cost challenges compared with the bigger banks.