The Commonwealth Bank of Australia (CBA) has refused to rule out possible job cuts within the bank, as they prepare for the worst.
According to CBA chief executive Ralph Norris, the economy is set to get worse as unemployment rises and further threatens the banking system.
“There’s no doubt that the toughest period in the Australian economy still lies ahead of us… unfortunately the unemployment rate will rise, and defaults will increase,” he told a business lunch in Melbourne yesterday.
He believes that the turmoil currently being felt in Europe will begin to filter through to Australia in the next couple of months.
“Now we’re seeing the collapse of the Eastern European countries’ currencies. This has led to a huge amount of debt in local currencies that has not been hedged, and this is obviously going to come back and haunt the banks that have lent money to these sorts of countries.”
Norris said that CBA’s profit margin on home lending is significantly low and credit conditions remain tight.
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