(12 October 2007 – Australia) Westpac chief David Morgan has advocated a re-think of the current Australia’s financial system due to considerable changes in the ten years since the Wallis review.Morgan has previously said that the Four Pillars policy is out of place in the current economic environment and has now said that this should be part of a system review.
He told an Australia-Israel Chamber of Commerce lunch in Melbourne that in the decade since the Wallace inquiry, there has been widespread changes in finance, superannuation and growth in the non-bank sector.
It is time to let the market determine the shape of the financial system in Australia, he reasoned, although this still included the normal constraints of prudential supervision and competition policy. If market forces were to play out, he added, you would likely see a lower number of stronger banks.
The Westpac chief executive further detailed his ideas of the Four Pillars issue, stating that normal competition policy would only allow one major merger, because more would create just two major banks and would thus infringe on anti-competition policy.