fed is inflating at 341 per cent per year .. , page-5

The Commonwealth Bank got an extra $35 billion thanks to Kevin Rudd's unlimited deposit guarantee.

I'll leaved it up to you to work out how much potential lending that equates to.

CBA says "Thanks K Rudd".

CBA fattens its balance sheet

* November 1, 2008
*

THE balance sheet of the Commonwealth Bank has been the major beneficiary of a rush to bank deposits during the credit crisis, official figures confirm.

The latest snapshot by the banking regulator shows that between May, when equity markets resumed their downward slide, and the end of September, the quantity of deposits on the books of banks in Australia rose 9%.

In that same period, deposits lodged with the Commonwealth Bank jumped 17.5%, making up $35 billion of the $100 billion increase across the banking sector.

Still, the figures show smaller banks including BankWest and ING Direct suffered an outflow of funds over September as customers began getting nervous about banks in Europe and the US began teetering.

As the credit crisis has deteriorated, banks have been increasingly dependent on their deposits as a source of funding.

Paying interest on deposits is less expensive than scouring global money markets for scarce funding.

Wall Street investment banks Morgan Stanley and GoldmanSachs, for example, opted to take on increased regulation by the US Federal Reserve partly so they could market themselves as deposit-taking banks.

The figures add to the argument that large Australian banks have done relatively well out of the credit crisis, grabbing increased quantities of deposits and strengthening their stranglehold over the mortgage market as non-bank lenders fall by the way-side.

Commonwealth bolstered its position as the country's deposit-leader, largely at the expense of smaller, foreign-owned banks.

The combined deposits of the country's second biggest bank, the National Australia Bank, rose 9% between May and September.

In the same period, Westpac's deposit base rose 9.8%, and ANZ's 7.4%. St George Bank grew its deposit base by 13.6%.

Bank deposits have also ballooned as investors pull money out of the equity market for the safety of cash and term accounts.

The figures, from the Australian Prudential Regulatory Authority, do not capture the two weeks preceding the Government's guarantee of all bank deposits on October 12, which were marked by a rush of global bank failures and a rising sense of panic. The Government guarantee was said to have been partly triggered by a flight of deposits from smaller banks to their larger rivals.

In the two weeks following the guarantee, foreign bank branches that were not covered also lost of billions of dollars as money market managers shifted their funds to banks enjoying government protection.

BankWest, which earlier this month was snapped up by Commonwealth Bank in a $2.1 billion deal, experienced a 6.6% drop in deposits during September, while ING Direct's total deposits fell 3.2%.

The Government has since extended the coverage of the guarantee to all banks in Australia including foreign bank branches but not hard-pressed mortgage funds.

http://business.theage.com.au/business/cba-fattens-its-balance-sheet-20081031-5fhg.html