RETAIL BANKING | Staff Reporter, Australia

Australian banks to pass on financial hit from levy to customers and shareholders

CBA CEO said "there is no middle option to absorb costs".

According to Reuters, Australia's biggest banks will pass on the financial hit from a new A$6.2 billion ($4.60 billion) tax to their customers and shareholders, the companies said on Monday in their first detailed responses to the surprise levy.

Commonwealth Bank of Australia, the country's No. 1 lender, described the tax on liabilities unveiled in last week's federal budget as an "unfair penalty" in a submission to a government consultation process.

"The realities of running a business, whether small or large, are that higher costs are either passed on to customers through reduced service levels or higher pricing, or to shareholders through lower returns," CBA CEO Ian Narev said in the submission. "There is no middle option to absorb costs."

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