The credit crunch has changed the game. Because of the number of high profile bank failures - Lehman Brothers, Washington Mutual, Northern Rock just to mention a few, there has been total lack of confidence in the inter-bank system. Even higher quality institutions do not have access to inter-bank credit or if they do are having to pay increased interest rates that are no longer viable to lend to customers economically.

Equally, the securitisation markets have closed, primarily driven by the lack of confidence - the US sub-prime debts were securitised in the marketplace and with various insurance backed guarantees were given a AAA rating for investors (the highest rating available). So if AAA rated securitised packages have gone sour what chance is there for other types of securitised packages?

As a result the only effective sources of money to lend are from Cash deposits and internal equity. This explains why over the past few months Australian Banks, especially the smaller ones, have aggressively been pushing to secure cash deposits.