Just when investors thought the recent share market turmoil was showing signs of abating, Australia third biggest bank has revealed more fallout from the global credit crisis.
In a special update to investors this morning, the ANZ Bank dramatically widened its provisions for bad debt from $567 million to $975 million in the full year.
That is up more than 70 per cent from this time last year, reflecting difficult conditions facing Australian firms amid the global credit crunch.
ANZ chief executive Mike Smith told analysts and journalists there were more risks on global markets that were "yet to crystallise".
"As turmoil in global markets and the slowing of the US economy plays out and the Australian economy slows due to tighter monetary policy and credit conditions, there are likely to be flow-on effects for the commercial portfolios," he said.
"There is a change taking place in the credit cycle and we intend to continue to take a conservative approach in reviewing our provisioning requirements."
ANZ's shares fell 5 per cent in the wake of the announcement.
Opes Prime
Mr Smith also spoke for the first time about the collapse of the Melbourne stockbroking firm Opes Prime.
As the group's key lender, the ANZ is the creditor first in line and has been selling shares held by Opes Prime to recover the $650 million it is owed.
ANZ's share selloff comes after more than 1,000 regular clients of Opes Prime were told their investments were uncertain, with some likely to lose their life savings.
But Mr Smith is making no excuses.
"We have to protect our commercial position and our shareholders interests," he said.
"But it's tough for everybody and I know that. When irregularities of this nature occur within a company, there are no winners."
Source: By Australian Broadcasting Corporation
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