SYDNEY – Australian bank shares recorded on Tuesday their highest increases in almost a decade, a day after the release of a report on decades of wrongdoing and malpractices in the financial sector.
The Australian stock index ASX 200, which gained 5 percent during the day, closed up 1.9 percent at 6,005.90 points, while the All Ordinaries Index increased 1.7 percent to 6,068.10.
Fund manager AMP, who was embroiled in a scandal for charging for services not rendered, rose 9.73 percent.
Westpac, one of four major banking organizations in Australia, closed with an increase of 7.36 percent in fifth place.
The rest of the Big Four banks, which include the Commonwealth Bank of Australia, the National Australia Bank and the Australia and New Zealand Banking Group, also closed with gains of 7 percent and 3.8 percent.
A royal commission appointed by the Australian government, led by former high court judge Kenneth Hayne, announced on Monday 76 recommendations to reverse a culture that prioritized profit over customers in these financial institutions.
However, while regulators can now crack down on banks for wrongdoings, the recommendations are being largely seen as a respite for the banks.
The recommendations, including stricter monitoring and penalties on institutions that take advantage of customers, were welcomed by the Australian government.
It promised to act on all the recommendations to prevent a repeat of aggressive and dishonest sales tactics by the banks and other financial institutions, which sometimes did not even spare the dead or the differently abled.
Hayne, however, did not recommend criminal prosecution for those responsible for these malpractices.
In a report titled “tough talk, soft recommendations,” UBS banking analyst Jon Mott said that investors were expecting far more damaging findings and far reaching reforms, ABC news reported.
“The much anticipated release of the royal commission’s final report was disappointing, in our view,” he wrote in a note to clients on Monday night.
“There was much discussion around misconduct within the banks and the need to change culture; however, the final recommendations fell well short of market expectations,” according to the analyst.