A tradesman works on the roof of a house under construction at a housing development located in the western Sydney suburb of Oran Park in Australia, October 21, 2017. Picture taken October 21, 2017. REUTERS/David Gray Acquire Licensing Rights
BENGALURU, Dec 1 (Reuters) – The Reserve Bank of Australia will keep its key interest rate unchanged at 4.35% on Tuesday and a rate cut is now not expected to happen until the fourth quarter of next year due to a strong housing market, according to a Reuters poll.
Even with rates at a 12-year high, Australian home prices have recovered all of their 2022 losses since finding a floor in January. They are expected to rise 8% this year and another 5% next year, a separate Reuters poll showed.
“We expect there will be no change from the RBA next week, but we do think they will maintain a hawkish bias. So they’re going to talk up the prospect of rate hikes, but ultimately we don’t think they’re going to deliver,” said Ben Picton, senior strategist at Rabobank.
The interest rate poll, conducted Nov. 29-Dec. 1, showed 28 of 30 economists, including those at Australia’s big four banks, expect the central bank will keep its official cash rate (AUCBIR=ECI) on hold on Dec. 5.
Although consumer price inflation in October logged a slower annual pace of 4.9% growth compared with 5.6% in September, that was still well above the RBA’s 2-3% target range.
Two economists, however, predicted a 25 basis point hike.
Looking further ahead, 20 of 29 economists predicted the RBA will hold rates steady until end-March while the rest forecast a quarter percentage point hike by then.
Poll medians showed rates on hold until end-September followed by a 25 basis points cut to 4.10% in the last quarter of 2024, one quarter later than predicted in a November survey and putting the RBA behind many of its peers.
The Australian housing market, already one of the most expensive in the world, is expected to maintain steady growth as increasing demand outstrips supply.
Expectations for average home prices in Australia this year have been revised up consistently – from a 9.1% fall in Reuters’ February poll to an 8.0% rise in the December poll, underscoring the market’s resilience in spite of higher interest rates.
“Multiple consecutive interest rate rises earlier in the year were expected to considerably impact Australia’s current mortgage holders. However, distressed sales were relatively minimised due to increasing cash buyers propping up the residential market and the Australian economy continuing to hold full employment,” wrote Michelle Ciesielski at Knight Frank, who took part in the Nov. 16- Dec .1 survey of 11 property analysts.
“Compared to the significantly higher migration, the current limited number of new homes being built or being started by developers points to inevitably higher house prices being achieved in 2024.”
The poll, which asked about the outlook for home prices in Sydney, Melbourne, Brisbane, Adelaide, and Perth, showed expectations ranging between 3.5% and 7.0% growth for both 2024 and 2025.
Asked about how the ratio of home ownership to renters will change over the coming five years, all nine analysts who responded to the question said it would decrease.
“Affordability looks terrible right now because home prices are back to their record highs and interest rates are at their multi-year highs, which means you’re kind of getting hit from both sides,” said Diana Mousina, deputy chief economist at AMP.
“Affordability could improve if prices fall a little bit and it will also improve marginally if the RBA cuts interest rates. But it’s not going to improve dramatically unless you see a very big fall in prices by 30%, if not more.”
(Other stories from the Reuters quarterly housing market polls)
Reporting by Devayani Sathyan; Polling by Susobhan Sarkar and Anant Chandak; Editing by Ross Finley, Jonathan Cable and Edwina Gibbs
Our Standards: The Thomson Reuters Trust Principles.
A row of newly built apartment blocks is seen in the suburb of Epping, Sydney, Australia February 1, 2019. Picture taken February 1, 2019. REUTERS/Tom Westbrook/ Acquire Licensing Rights
SYDNEY, Nov 23 (Reuters) – Australian home prices have defied a substantial jump in interest rates to hit a record high, data from property consultancy CoreLogic showed on Thursday, a sign that monetary policy might not be restrictive enough.
Since finding a floor in January, home prices have risen 8.1% as of Nov. 22, more than offsetting a 7.5% fall that commenced after the Reserve Bank of Australia started tightening monetary policy in May last year, according to CoreLogic.
It took around nine months for prices to move from record highs to the recent trough, then roughly 10 months to recover from the downturn.
Across the capital cities, Perth, Adelaide and Brisbane were all at record highs, while Sydney and Melbourne were still 1.8% and 3.6% lower respectively than the previous peaks in March last year.
The resilience in the property market is one of the reasons that the RBA resumed raising interest rates to a 12-year high of 4.35% this month after four months of steady outcomes.
The RBA expects the additional wealth from rebounding property prices to provide support in consumption.
Markets are pricing only a 5% chance it will hike again in December, but imply around a 40% risk it might move once more in the new year.
Reporting by Stella Qiu; Editing by Sam Holmes
Our Standards: The Thomson Reuters Trust Principles.
LONDON, Nov 16 (Reuters) – World stocks fell for the first time in five sessions, oil slipped and the dollar saw a slight lift on Thursday, as markets continued to acclimatize to falling borrowing costs after nearly two years of relentless gains.
Europe’s moves saw the STOXX 600 (.STOXX) slip from a more than one-month high, Wall Street look set for an early dip, and Taiwan’s dollar rise after China’s President Xi Jinping and U.S. counterpart Joe Biden agreed to reopen key military communications channels between the two superpowers.
Xi also underscored the point by saying China would not “fight a cold war or a hot war with anyone”.
Global markets have rallied sharply this month as inflation data out of the United States and parts of Europe, such as Britain, have reinforced hopes that major central banks are now done raising borrowing costs.
Robust U.S. retail sales figures on Wednesday were a reminder that it might not be a straight line move, however, with the focus now squarely on weekly U.S. jobless claims data later and a monthly euro zone inflation print on Friday.
“If you don’t get confirmation of the slowing economic direction from every single piece of data every single day we risk running out of momentum on the big trades,” Societe Generale FX strategist, Kit Juckes, said.
“Until we get to the point where rate cuts are just around the corner, everything is going to be very stop-start. The dollar sell-off is stop-start, the bond market rally is really stop-start and the equity market is all over the place.”
Key government bond market borrowing costs resumed their broad downward trend on Thursday, driven by increasing confidence that rate cuts are coming next year.
Germany’s 10-year bond yield dipped to 2.62% but held above the previous day’s two-month low of 2.568%, while sterling sank to a six-month low against the euro as dealers in London inched closer their predictions on when the Bank of England (BoE) will start cutting rates. EUR/GVD
Many now think it might be as soon as May although BoE policymaker Meg Greene warned on Thursday that investors are missing the message that central banks have been pushing recently that interest rates will remain higher for longer.
“I think markets globally haven’t really clocked on to this,” Greene told Bloomberg Television, adding that the BoE was not talking about cutting rates.
CHINA PROPERTY
Asian stocks fell overnight as new Chinese data showed continued weakness in its problem-hit property sector which dented recent optimism about a recovery in the world’s second-largest economy.
While data this week showed China’s industrial and retail sectors are now making a comeback, figures have also shown a sharp drop in property investment and weak home prices, underscoring the ongoing drag the sector is having.
There was mixed news from Japan too, where exports grew for a second straight month in October but at a sharply slower pace due to slumping China-bound shipments of chips and steel.
“The weak economic data from both countries indicate the fact that the global economy is slowing down, highlighting ongoing macro headwinds that businesses face,” said Tina Teng, market analyst at CMC Markets.
XI AND BIDEN
Australian shares (.AXJO) ended their day down 0.7% as strong wage data indicated that inflationary pressures there are still running high.
Japan’s Nikkei (.N225) dipped 0.3%, moving into reverse after it, along with the main MSCI Asian and emerging market indexes, all posted their biggest gains in a year on Wednesday.
Chinese stocks showed some disappointment at Xi and Biden’s first meeting in years, with Shanghai’s blue-chip CSI300 index (.CSI300) closing down 1% and Hong Kong’s Hang Seng index (.HSI) ending 1.3% lower.
While the two leaders agreed to resume military-to-military communications and cooperate on anti-drug policies, a sign ties are improving, some investors were disappointed at a lack of other breakthroughs in the talks.
The MSCI main 47-country global stocks index (.MIWD00000PUS) was down for the first time in five sessions after a near 8% surge this month.
Wall Street futures pointed to a slightly weaker start there too, although there was modest relief that the Senate had overwhelmingly approved a temporary funding measure to avert another U.S. government shutdown for now.
Money market traders have now fully priced in that the Federal Reserve will keep U.S. interest rates steady in December. They see the first rate cut of the cycle in May.
The yield on benchmark 10-year Treasury notes was back under 4.5% compared with its U.S. close of 4.537% on Wednesday. The two-year yield hovered at 4.88% compared with a U.S. close of 4.916%.
In currencies, the euro was flat at $1.0848, having gained 2.5% in a month, while the dollar index , which tracks the greenback against a basket of currencies of other major trading partners, was fractionally higher.
Oil traders, meanwhile, nudged U.S. crude down 0.3% to $76.55 a barrel. Brent crude was at $80.90 per barrel while safe-haven gold was slightly higher at $1,965 per ounce .
Additional reporting by Julie Zhu in Hong Kong; Editing by Christina Fincher and Mark Potter
Our Standards: The Thomson Reuters Trust Principles.
The logo of the ANZ Bank is seen at Lambton Quay, in Wellington, New Zealand November 10, 2022. REUTERS/Lucy Craymer/File Photo Acquire Licensing Rights
Nov 13 (Reuters) – Australia’s ANZ Group (ANZ.AX) on Monday posted a record annual cash profit which fell slightly short of estimates as the bank diversified its operations in commercial banking amid higher interest rates and a tough housing market.
The country’s No.3 lender posted cash profit of A$7.41 billion ($4.51 billion) for the year ended Sept. 30, compared with A$6.50 billion a year earlier, missing the Visible Alpha consensus estimate of A$7.56 billion compiled by Citi.
“Earnings were a little shy of some estimates, which could keep a lid on the share price performance today,” said Tim Waterer, market analyst at KCM Trade.
“Nonetheless, the results show that the current era of high interest rates have been a boon for the top and bottom lines of the big banks in Australia from a margin perspective.”
ANZ, which is caught up in regulatory scrutiny over its $3.2 billion Suncorp Group’s (SUN.AX) banking business bid, has been expanding its operations in retail and commercial businesses.
ANZ intends to expand its commercial business with focus on its currency and payment sites while reducing costs, it said.
The banking group’s Aussie commercial business recorded 11% revenue growth over the year with lending rising to record high of A$62 billion.
Australia’s top lenders have been cashing in on their margins in an environment where interest rates have been hiked 13 times in just 18 months, helping them take advantage of the greater spread between the interest they pay to their customers and the profits they earn by investing.
ANZ declared a final dividend of 94 Australian cents apiece, up from 74 Australian cents apiece announced a year ago.
Net interest margin rose to 1.70% for the year from 1.63% a year ago.
ANZ, however flagged that the external environment will likely remain challenging adding that higher interest rates will impact economic activity as it sees “another year of cost-of-living pressures.”
($1 = 1.5733 Australian dollars)
Reporting by Rishav Chatterjee and Roushni Nair in Bengaluru; editing by Grant McCool
Our Standards: The Thomson Reuters Trust Principles.
A man looks at an electric board displaying the Nikkei stock average outside a brokerage in Tokyo, Japan June 14, 2023. REUTERS/Kim Kyung-Hoon/File Photo Acquire Licensing Rights
SYDNEY, Nov 9 (Reuters) – Asian share markets rallied on Thursday and the dollar firmed, even as global investors again sold off the troubled mainland Chinese property sector.
MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) was up 0.1%, and is up 4.3% so far this month.
The yield on benchmark 10-year Treasury notes reached 4.4902% compared with their U.S. close of 4.508% on Wednesday.
The two-year yield , which rises with traders’ expectations of higher Fed fund rates, touched 4.9277% compared with a U.S. close of 4.936%.
Australian shares (.AXJO) were up 0.26%, while Japan’s Nikkei stock index (.N225) rose 1.53%.
Hong Kong’s Hang Seng Index (.HSI) reversed an early gain and was down 0.25% in the afternoon while China’s bluechip CSI300 Index (.CSI300) was 0.1% higher.
China’s troubled property sector is being closely watched on Thursday after most major stocks rallied one day earlier following a Reuters report that Ping An Insurance Group had been asked by the Chinese authorities to take a controlling stake in Country Garden Holdings (2007.HK) .
A spokesperson for Ping An (601318.SS) said the company had not been approached by the government and denied the Reuters report that cited four sources familiar with the plan.
The Hang Seng Mainland Properties Index (.HSMPI) shed 3.73% on Thursday and the Hang Seng Properties Index (.HSNP), which covers Hong Kong developers, was down 0.7%.
“I think for equities investors, they are still shying away from Chinese property because there are so many unknowns,” said Jason Lui, BNP Paribas’s Head of APAC Equity & Derivative Strategy.
“It’s difficult to ask investors to go back to pre-property downturn days, fundamentally property is going to play a very different role in Chinese economic development going forward.
“Property needs to stop being a drag on GDP and sentiment so investors can move on to the real growth drivers.”
In early European trades, the pan-region Euro Stoxx 50 futures were up 0.1%, German DAX futures were down 0.05%, FTSE futures were down 0.16% at 7,401.5,
U.S. stock futures, the S&P 500 e-minis , were down 0.06% at 4,396.8.
Chinese inflation figures for October published on Thursday showed a 0.1% decline compared to September and a 0.2% fall from one year, according to official statistics.
The dollar dropped 0.03% against the yen to 150.93 . It is moving back towards its high this year of 151.74 on Oct. 31.
The European single currency was up 0.0% on the day at $1.0708, having gained 1.25% in a month, while the dollar index , which tracks the greenback against a basket of currencies of other major trading partners, was up at 105.51.
The dollar has rebounded from last week’s sharp sell-off on rising confidence the Fed has ended raising rates. There is less agreement on whether a rate cut is on the horizon with inflation still above the U.S. Federal Reserve’s 2% target.
On Wall Street, the S&P 500 (.SPX) rose 0.10% and the Nasdaq Composite (.IXIC) added 0.08%. The Dow Jones Industrial Average (.DJI) fell 0.12%.
The S&P 500 rose for the eighth consecutive day, extending its longest win streak in two years.
The Federal Reserve last week kept the benchmark overnight interest rate in the current 5.25%-5.50% range and the central bank is due to meet again mid next month.
The U.S weekly jobless claims published on Thursday will be closely watched as an indicator of the how the country’s labour market is performing. Economists predict claims will reach 219,000 after coming in at 217,000 last week.
Oil prices slid over 2% on Wednesday to their lowest in more than three months on concerns over waning demand in the U.S. and China.
In Asian trading Thursday, U.S. crude ticked up 0.15% to $75.44 a barrel. Brent crude rose to $79.68 per barrel.
Gold was slightly lower. Spot gold was traded at $1948.9332 per ounce.
Reporting by Scott Murdoch; Editing by Tom Hogue and Stephen Coates
Our Standards: The Thomson Reuters Trust Principles.
[1/2]Soccer Football – FIFA Women’s World Cup Australia and New Zealand 2023 – Third Place Playoff – Sweden v Australia – Brisbane Stadium, Brisbane, Australia – August 19, 2023 Australia’s Sam Kerr reacts REUTERS/Dan Peled/File Photo Acquire Licensing Rights
SYDNEY, Nov 8 (Reuters) – Australia’s Matildas will join their male counterparts in the Socceroos in receiving match and commercial payments instead of centralised contracts under the terms of a new collective bargaining agreement (CBA) announced on Wednesday.
Football Australia (FA) said the four-year deal would enhance the revenue-sharing model adopted under the last CBA after what the body described as a period of “unparalleled international success” for both national teams.
The Matildas captured the hearts of the nation with their run to the semi-finals of the Women’s World Cup on home soil in August, while the Socceroos were similarly feted after reaching the last 16 at the men’s showpiece in Qatar last year.
“The new CBA represents a sophisticated economic model that rewards our players in tandem with the growth and commercial success of our national teams,” FA chief executive James Johnson said in a news release.
“It’s a model that ensures as we scale new heights commercially, our players will share in the fruits of these triumphs.
“This agreement is more than a contract, it’s a commitment to progress and a promise that as our revenue base flourishes, so will the opportunities and rewards for our players.”
National team players of both sexes will receive enhanced payments on a scaled revenue-sharing model aimed at rewarding success, with 70% coming in match fees and 30% in an annual commercial payment.
The Matildas will get equal treatment to the Socceroos in match preparation, including the option of single rooms at all gatherings and business class flights around the world.
Accommodation for carers accompanying players who are mothers will now be offered for children up to the age of four rather than two.
The agreement also sets aside 5% of the revenue generated by the national teams to fund youth programmes, while FA will make a guaranteed contribution to the Past Players Programme run by the Professional Footballers Australia (PFA).
FA have also committed to developing a human rights policy.
“This agreement will ensure that our national team players have everything they need to excel on the pitch … and, importantly, allow us to have more impact off the pitch than ever before,” said Socceroos midfielder Jackson Irvine, who is president of the PFA.
Reporting by Nick Mulvenney, editing by Peter Rutherford
Our Standards: The Thomson Reuters Trust Principles.
SYDNEY, Nov 6 (Reuters) – Private credit lenders are increasing their footprint in parts of the Australian commercial property market, providing alternatives for borrowers as banks scale back higher-risk lending amid a slowdown brought on by elevated interest rates.
The funds available for deals are growing as investors including pension funds, sovereign wealth and insurance firms look for meaty returns hard to find in today’s equity markets, especially in the beaten-down real estate sector.
Australian real estate specialist Qualitas (QAL.AX), whose backers include the Abu Dhabi Investment Authority, has nearly doubled funds under management to A$8 billion ($5.07 billion) since mid-2022, with roughly half the increase since this June.
U.S.-based PGIM Real Estate expects to deploy a further $1 billion in the country over the next few years, said its head of Australian real estate Steve Bulloch.
“Over the last 12 to 18 months we have seen a lot more institutional investor interest and many are seeing this as an attractive entry point to diversify their portfolios,” he said.
The moves are part of the steady growth of non-bank lenders in a market where four banks, Commonwealth Bank (CBA.AX), National Australia Bank (NAB.AX), Westpac (WBC.AX) and ANZ Group (ANZ.AX), still account for the bulk of all lending.
At roughly 5% of all financial assets in 2022, non-bank lenders are a minnow in Australia compared to the International Monetary Fund’s estimate of 50% globally.
But non-bank lending has been growing, reaching more than A$600 billion in assets last year, including lenders focused on retail credit. Lenders are expanding into residential and commercial construction as banks slow lending or exit, a March report from the Reserve Bank of Australia (RBA) said.
JUICY RETURNS
Investors can expect returns from 9% to 11% with the added security of loans pledged against real assets like condos or warehouses, often with a 30% to 40% equity buffer, said Paul Notaras, executive director at Barings Real Estate Australia.
The juicy returns mean higher costs for borrowers, with the RBA in March putting the spread over a major bank loan at about 200 basis points for business loans of all types.
Yet non-bank lenders are a welcome source of credit at a time when banks have slowed lending to sections of the property sector historically seen as high risk like construction, Notaras said.
Some 2,213 construction firms filed for insolvency last financial year, the highest on records going back to 2013, as builders are sandwiched between higher costs and fixed-price contracts.
New commercial property lending by the four major banks has averaged 1% growth per quarter since June 2022, levels last seen during the pandemic, data from the prudential regulator shows, with exposure to offices and residential contracting.
More prudential scrutiny and less risk appetite has led major banks to prioritise blue-chip property companies, Qualitas co-founder Andrew Schwartz said.
“The traditional financiers have pulled back their loan-to-value ratios, narrowed the type of borrower that they’re wanting to deal with, it’s generally harder and you’re more likely to fall into the alternatives sector.”
For build-to-rent residential projects, banks hesitate to lend more than 40% to 45% against a project’s value, while private lenders could go as high as 65%, Barings’ Notaras said.
Bonds are out of reach for many unrated mid-market borrowers and property-related bond issuance is at record lows, with A$299 million raised the year to September, about a tenth of the decade average, according to Dealogic data.
STILL CHOOSY
Even for alternative lenders, the most beleaguered segments, such as office and retail, remain tough propositions as higher rates slash prices and home working and online shopping scramble the outlook for rental growth.
Instead, financiers are drawn to companies building for Australia’s chronically undersupplied residential market, especially in the budding build-to-rent sector, and the resilient market for warehouses and industrial property.
A A$1.45 billion partnership between Qualitas and the Abu Dhabi Investment Authority will focus on the residential sector.
“We’ve had more office financing proposals presented to us than I can ever remember and I can only assume it’s because the banks don’t want to do them and big institutions have too much,” said Qualitas’ Schwartz.
“We say office, interesting but less compelling.”
($1 = 1.5815 Australian dollars)
Reporting by Lewis Jackson in Sydney and Rae Wee in Singapore; Editing by Jamie Freed
Our Standards: The Thomson Reuters Trust Principles.
A sign stands at the front of a house after it was sold at an auction in the Sydney suburb of Waverley in Australia May 28, 2015. REUTERS/David Gray/File Photo Acquire Licensing Rights
SYDNEY, Nov 1 (Reuters) – Chances of an imminent hike in Australian interest rates grew on Wednesday after data showed house prices rebounding to near record highs and the International Monetary Fund recommended tightening monetary and fiscal policy screws to curb inflation.
Markets responded by pricing in a near-70% chance that the Reserve Bank of Australia (RBA) will raise rates by a quarter point to 4.35% when it meets on Nov. 7, ending four months of keeping rates on hold.
High readings for inflation and consumer spending had already suggested policy might be too loose, and that view was reinforced by a CoreLogic report showing house prices had regained all the ground lost during the RBA’s previous 12 rate hikes.
“The turnaround in property prices has been quite remarkable,” declared Gareth Aird, head of Australian economics at CBA. “The RBA’s 400 basis points of tightening reduced home borrower capacity by 30%, but property prices are now back to their previous peak.”
So far this year, values in Sydney, Perth and Brisbane are all up more than 10%, adding billions to household wealth at a time when the RBA would really rather they not be spending.
A separate report from PropTrack foresaw further gains ahead given booming migration, a tight rental market and a supply squeeze as home building lagged far behind population growth.
IMF WEIGHS IN
The IMF also weighed in on Wednesday by arguing tighter monetary and fiscal policy was needed in order to bring inflation back to the RBA’s target band of 2-3%.
In its regular review of Australia, the IMF staff noted the resilience of the economy as the jobless rate remained near a 50-year low of 3.6%, while economic output was estimated to be running at 1% above potential.
“Staff therefore recommend further monetary policy tightening to ensure that inflation comes back to the target range by 2025 and minimize the risk of de-anchoring inflation expectations,” they said.
They also called for different levels of government to take a more measured approach to infrastructure investment as massive projects compete for scarce resources and push up costs.
S&P Global Ratings estimates capital expenditure by Australian states and territories will be a record A$320 billion over the next four years.
“Each project on its own probably doesn’t add that much to national inflation,” said Martin Foo, lead analyst at S&P Global Ratings. “But the problem is that if you add up all of these projects together, then they are having a significant impact.”
Reporting by Stella Qiu and Wayne Cole; Editing by Jamie Freed & Simon Cameron-Moore
Our Standards: The Thomson Reuters Trust Principles.
A small toy figure and mineral imitation are seen in front of the BHP logo in this illustration taken November 19, 2021. REUTERS/Dado Ruvic/Illustration/File Photo Acquire Licensing Rights
Oct 31 (Reuters) – Global miner BHP Group (BHP.AX) said on Tuesday it would invest $4.9 billion in stage two of its Jansen potash project in Canada to double its capacity, following a $5.7 billion capital investment for stage one in 2021.
The first stage is 32% complete and progressing as per schedule, said BHP. It expects the second stage to take six years, with production of about 8.5 million tonnes per annum (mtpa) in late fiscal 2029.
The additional investment will be used to develop further mining districts, expand processing facilities and add more rail cars, among other uses, the world’s largest listed miner said.
The miner had invested $4.5 billion in the potash project in Saskatchewan project before the first stage. It is one of BHP’s biggest-ever capital investments and the miner is confident in the project despite the recent slump in commodity prices.
“This is an important milestone that underscores our confidence in potash and marks the next phase of the company’s growth in Canada,” CEO Mike Henry said in a statement.
BHP said it expects the second stage to result in about 4.36 Mtpa of production at a capital intensity of about $1,050/tonne.
Reporting by Rishav Chatterjee in Bengaluru; Editing by Savio D’Souza and Rashmi Aich
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PwC sign is seen in the lobby of their offices in Barangaroo, Australia June 22, 2023. REUTERS/Lewis Jackson Acquire Licensing Rights
SYDNEY, Oct 26 (Reuters) – PwC Australia said on Thursday that dozens of staff who had been set to move across to spin-off consultancy Scyne Advisory will no longer have roles at the new firm and have been told to look for jobs internally.
PwC Australia sold its government advisory business, responsible for a fifth of revenues, to private equity group Allegro Funds for a nominal A$1 in August after government agencies cut ties over a national scandal involving leaked tax plans.
Over 1,500 people out of PwC Australia’s more than 9,000 staff were expected to move to the new firm, PwC said in September.
PwC, one of the world’s “big four” consultancy and auditing firms, said on Thursday, however, that 78 of those staff will not have roles at Scyne because a number of PwC partners had opted not to transfer.
The 78 have been offered paid leave and encouraged to look at the internal jobs board, the firm said in a statement.
“PwC will do everything in its power to help support these individuals,” CEO Kevin Burrowes said in a statement.
A Scyne Advisory spokesperson said a delay in closing the deal, originally planned for September, changes to its “partner mix” and the need to establish Scyne as a “sustainable business” were factors in the decision.
The move comes as Scyne Advisory gears up to reclaim advisory work that netted PwC Australia A$680 million ($427 million) last financial year.
The Department of Finance, which sets procurement rules, this month gave Scyne the all clear to resume work with the government and said no staff involved in the tax leaks scandal had transferred to the firm.
($1 = 1.5929 Australian dollars)
Reporting by Lewis Jackson; Editing by Lincoln Feast and Edwina Gibbs
Our Standards: The Thomson Reuters Trust Principles.
