ACCC not happy with competition
(26 May 2009 – Australia) The head of the ACCC has indicated that competition in the current banking environment has been reduced due to mergers and the Government’s bank guarantee.
The Australian Competition and Consumer Commission (ACCC) head, Graeme Samuel, told ABC's Lateline Business that the lack of competition created since the financial crisis hit is a problem that might not necessarily be possible to fix.
Samuel said that there's no question that since the global financial crisis hit towards the latter end of last year, various policy decisions that have been taken in Australia and elsewhere throughout the world have had an impact.
He said that the impact has caused an increasing gap between the big four and the regional banks, while the non bank financial institutions have effectively gone into hibernation.
Samuel pointed particularly at the BankWest acquisition by CBA, but indicated that the ACCC has little choice but to accept the merger.
The current structure may in fact be difficult or even impossible to undo, despite people suggesting that competition can be sorted out when the financial crisis ends, Samuel indicated.
Part of the competitive problem, Samuel added, was the Government guarantees of wholesale funding and the disparate costs associated with those guarantees in relation to the regional banks versus the big four banks.
Samuel said that factors like the guarantee and bank mergers have meant that the big four banks are becoming more dominant. The gap between their role in the banking system and in the financial sector and the role of the regional banks is growing.
Samuel also said that mergers in the future involving the big four were highly unlikely. There would be grave concerns about any further significant consolidation that saw the position of the big four banks improved relative to the Regionals and non-bank institutions, he said.
Samuel said that there's no question that since the global financial crisis hit towards the latter end of last year, various policy decisions that have been taken in Australia and elsewhere throughout the world have had an impact.
He said that the impact has caused an increasing gap between the big four and the regional banks, while the non bank financial institutions have effectively gone into hibernation.
Samuel pointed particularly at the BankWest acquisition by CBA, but indicated that the ACCC has little choice but to accept the merger.
The current structure may in fact be difficult or even impossible to undo, despite people suggesting that competition can be sorted out when the financial crisis ends, Samuel indicated.
Part of the competitive problem, Samuel added, was the Government guarantees of wholesale funding and the disparate costs associated with those guarantees in relation to the regional banks versus the big four banks.
Samuel said that factors like the guarantee and bank mergers have meant that the big four banks are becoming more dominant. The gap between their role in the banking system and in the financial sector and the role of the regional banks is growing.
Samuel also said that mergers in the future involving the big four were highly unlikely. There would be grave concerns about any further significant consolidation that saw the position of the big four banks improved relative to the Regionals and non-bank institutions, he said.
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