Editor's Note: Friend of The Rum Rebellion, Ryan Dinse of Exponential Stock Investor, has been conducting some really interesting research into the disruption of the Aussie banking sector. Whether it’s in blockchain, mobile payments or peer-to-peer lending…it appears the Big Four banks’ easy ride is ending. We’re soon going to be living in a whole new world of decentralised, technology-driven finance. Below Ryan shows how you should invest for it… |
Dear Reader, Bank in the day, career banker Joseph Healy earned a pretty penny to the tunes of millions working for the Big Four banks. But now he’s blowing the whistle on them. Healy is about to publish a damning book on the Australian banking oligopoly. Like me, he’s seen the inner workings of our financial institutions. Like me, he’s come to the conclusion that our banks are too powerful and need to be broken up. As you’ll see in my latest research here, Australia’s Great Bank ‘Unbundling’ is underway. It’s a radical disruption that is already happening. And there are some tantalising investment opportunities spinning off of it — if you know where to look for them… According to Healy, as reported in The Australian Financial Review: ‘…the big four don’t understand the meaning of the concept ‘‘a social licence to operate’’ as shown by their failure to pass on the full 25 basis points rate cut last week by the Reserve Bank of Australia. The big four only passed on 13 to 15 basis points to home loan borrowers. ‘In his book, Breaking the Banks – what went wrong with Australian banking, Healy describes the big four as ‘‘quasi-national’’ financial institutions that only need to earn a modest return above their cost of capital, which he estimates to be about 6 or 7 per cent. ‘‘‘With current return on equity of 12 or 13 per cent, the major banks are earning about double their cost of capital,’’ he says in an interview in Sydney. ‘‘‘The profits are way above what they should be.’’’ The tide is turning against our banks. Nothing can stop it. But there are ways you can potentially profit from it. I outline several here. Regards, | | Ryan Dinse, Editor, Exponential Stock Investor |
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