Australia's Big Four to face more competition: PM Rudd

“The Rudd government understands the need to keep competitive pressure on the big banks,” Swan said in a weekly economic note released today in Canberra. Commonwealth Bank of Australia, Australia & New Zealand Banking Group and Westpac Banking Corp. all increased their home-loan mortgage rates by more than the official cash-rate increase on Dec. 1.

Australia's credit unions, building societies, home-loan originators and other smaller lenders have battled for market share and funding after the U.S. subprime collapse shuttered global securitization markets. The strength of the Big Four is eroding competition and means any expansion plans they have through merging with smaller rivals are unlikely to be approved, the chief competition regulator said today.

“There's less competition” in Australia's banking industry, Competition and Consumer Commission Chairman Graeme Samuel said. “When you've got less competition, you'll have higher prices being charged.” Any proposed mergers would be examined critically, based on existing and likely future competition, he said.

Buying Bonds

The need to help smaller lenders led the government to purchase $8 billion (US$7.3 billion) of their mortgage-backed bonds, Swan said today.

The government has been buying residential mortgage-backed securities since November to bolster competition in the home lending market, according to information on its Web site.

“This will ensure they have a flow of funds to help keep them lending and competing with the big banks, and will help put downward pressure on mortgage rates over time,” Swan said today.

Some non-bank financial institutions in Australia also suffered when the government introduced bank guarantees more than a year ago to bolster confidence after the collapse of Lehman Brothers Holdings Inc.

1|2|Next Page>>

SharePrintEmail

Write a Comment

Terms

Enter your comments - 3000 characters max

Type in image code

Submit

 Receive China Post promos
 Respond to this email