Is any bank dumb enough to fund the Galilee Basin coalapolooza?
|
Version 0 of 1. Let’s play a fun game called, “which is the dumbest bank on the planet?” There’s plenty of competition, of course: all of those US lenders who gave mortgages to people with no income, setting off the global financial crisis (though they were savvy enough to get Washington to bail them out). Or there was the German bank that transferred $426m to Lehman Brothers the day the brokerage firm went bankrupt. Related: Australia: The new coal frontier But in 2015 the prize would definitely go to the bank that decides to underwrite the first Galilee Basin ultra-mega-coalapolooza. Just think what you’d have to discount before you loaned that project money: Faced with these facts, most of the banks you’ve heard of around the world have passed on the chance to fund Galilee coal. Not just passed – they’ve taken the unusual step of announcing in public they won’t fund it. HSBC has allegedly maintained arms dealers on its books, but it won’t touch Adani’s Galilee mine. Given the environmental questions, says its CEO, “it would be extraordinarily unlikely” that we’d bankroll Abbot Point. RBS, JP Morgan Chase, Barclays – they pled guilty last year to gaming the world’s foreign exchange markets, but even for them the Galilee project is too big a turkey to touch. Deutsche Bank last month agreed to pay a record fine for rigging London Interbank Offered Rate (Libor) trading, but the head of its supervisory board couldn’t have been clearer about Galilee: “We are currently not involved with this project and will also not be involved with it in the future.” That is to say, all these guys may be sleazy but they aren’t stupid. They’re willing to do nasty things but reluctant to lose money in the process. Related: Australian banks under pressure after French lenders rule out funding Galilee Basin coalmines The question is, what about Australia’s “big four” banks, who have yet to say anything in public one way or the other. Everyone knows that Adani must be asking them for money, since they can’t find anyone else and since the new Queensland state government seems at least a little less gullible than the last one when it comes to publicly financing such risky and destructive projects. Last week, thousands protested at hundreds of Commonwealth Bank locations across Australia and around the world following news that the bank was in talks with Adani. Commbank got a firsthand taste of what it would be like if they pursued, quite literally, the dumbest proposal on the planet: financing the severely unpopular Galilee coal mining and Abbot Point coal port expansion on the Great Barrier Reef. What about it, Commbank? Eager to be the poster child for maths-challenged banking everywhere? Westpac, you guys want to be known as the bank that killed the reef? Is ANZ eager to spend the next few decades explaining why it lit the fuse on the biggest carbon bomb in the antipodes? Is NAB raising its hand to be the lender of last resort for the fuel that suddenly nobody wants? Of course, it’s always just possible that nobody’s that dumb. |