(25 July 2008 – Australia) The ACCC has given preliminary approval to the Westpac and St George merger proposition before its final decision on August 20.In a Statement of Issues release, the Australian Competition and Consumer Commission (ACCC) said that it is unlikely that there will be any issues arising from a merger between the two banks in the core banking offerings of retail and all business banking.
The ACCC also gave the same verdict on insurance, but was not so sure about the issues involved in Wealth Management.
The merger of Westpac’s BT and St George’s Asgard and Advance wealth management operations had raised possible concerns, the commission said.
The ACCC detailed that BT, Asgard and Macquarie operate the three largest wrap account services in the market.
The ACCC also reported that some market participants suggested that other competing platforms do not offer the same levels of functionality and ‘scalability’ as the top three.
The preliminary report said that there were significant barriers to entry with these platforms. This includes significant capital costs associated with establishing a wrap platform and the ongoing technology and maintenance costs.
Some dealer groups have indicated that they do not consider they have the ability to bypass the merged entity through development of their own platforms. In particular, they do not manage the level of funds required to support a platform.
The ACCC said it would seek further information from market participants on the degree to which one wrap platform or master trust could be substituted for another.