GFC fallout 'is not over yet'

ONE of Australia's most senior bankers has warned that the global financial crisis is far from over.

ONE of Australia's most senior bankers has warned that the global financial crisis is far from over, with the Greek debt crisis threatening to derail the world economic recovery.

The deputy chief executive of the National Australia Bank, Michael Ullmer, told the Growth Challenge conference yesterday that financial conditions around the world would remain vulnerable to shocks.

Financial markets have reacted positively to the Greek parliament's move this week to approve austerity measures to save the embattled nation from a sovereign debt default.

But Mr Ullmer told the conference the markets should not become complacent towards the risks of new financial shocks emerging.

"The crisis is not over," he said. "A lot of people think it is, but there we can see it on the front page of the paper every day, especially with Greece, that there is a long way to go."

Mr Ullmer said Australia was currently experiencing a "phony war", with confidence weak despite a relatively strong performance of the local economy. NAB is the fourth-largest bank in Australia, but is the biggest lender to domestic businesses of the top four banks.

"We are going through a phony war. Consumers and businesses are cautious about the future," he said.

"They are talking about Greece, volcanic ash, the carbon tax . . . any risk that causes them to keep their hands in their pockets.

"People and business have built up significant cash reserves, with deposit growth exceeding credit growth for the first time in ages."