Commonwealth Bank confident on weathering crisis

The lender’s chief believe influx of retail deposits would protect Australian banks against higher funding costs.

Commonwealth Bank chief financial officer David Craig is confident it and Australia are in better shape to deal with the European sovereign debt crisis than they were before the global financial crisis three years ago.

Mr Craig said Australia would probably be shielded from most of the worsening crisis but there could be "unintended consequences".

The European dramas have already prompted wholesale funding costs to rise on world markets, but the top four Australian banks are fully funded.

The effects of the crisis on credit markets have started to be felt in Australia, with the swap rate between the official cash rate and the 90-day bank bills almost doubling.

Mr Craig said the rush of retail deposits would cushion the banks against higher funding costs.

"We are better prepared this time and the country is better prepared," Mr Craig said. "People are saving more than before, the growth has been large and we have a lot more deposits.

View the full story in The Australian.