RBA does not need to step in

18 September 2007

The Reserve Bank of Australia (RBA) has shut the door on rumours that the Australian banks have submitted requests for emergency funding.

Shares in Adelaide Bank and Bendigo Bank were hit by investors after rumours that banks could face a liquidity crisis after growing credit problems around the world.

But speaking to the Sunday Morning Herald, governor of RBA, Ric Battellino, said: "The bank is able to confirm that that rumour is false."

Adelaide Bank denied it had gone to the central bank to make a request for funding to be put in place, a spokesman told the newspaper: "We flatly refute any rumours that we're seeking assistance from the RBA."

Investors have been spooked by the recent events in the UK surrounding Northern Rock and there is evidence to show that easy borrowing may now be over.

Shares in Adelaide Bank dropped by seven per cent on Tuesday, while Bendigo Bank lost 5.5 per cent.

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