An Update on the Expansion of the ‘Big Four’ Banks and their Impact on the Economy
Most Australians would agree that their banking sector is dominated by a small group of powerful players. Known as the ‘Big Four’—Commonwealth Bank, Westpac, National Australia Bank, and ANZ—these institutions hold a significant share of the banking business in Australia. While their profits continue to soar, their customer service has been on a steady decline.
The growth of community banking in recent years has been promising. However, for larger transactions and deals, customers often find themselves turning to the big banks. The smaller players in the industry are seen more as an annoyance or a quaint addition to the financial sector. The threat they pose to the oligopoly is minimal at best.
The Australian public has always emphasized the importance of maintaining a viable financial sector with a diverse range of players. That is why the decision by the Australian Consumer and Competition Tribunal to allow the merger of ANZ and Suncorp’s banking arm has been met with disappointment by many. The merger, valued at $4.9 billion, will undoubtedly reduce competition in the market.
Interestingly, the Australian Consumer and Competition Council (ACCC) had previously denied the proposed merger in July 2022. However, the Tribunal came to a different conclusion upon appeal. It determined that the overall public benefits of the merger would outweigh any potential harm. This highlights the fact that different bodies can reach significantly different conclusions when presented with the same set of circumstances.
While acknowledging that competition would be lessened, the Tribunal deemed it not to be a substantial reduction. It also recognized that there would be some public detriment resulting from the merger but believed that it would be outweighed by the public benefit. This decision reminds us that value judgments and subjective assessments are involved in these matters, leading individuals with good intentions to arrive at varying findings.
The question arises as to what extent regulatory bodies should prioritize maintaining competition to protect consumers. Striking the right balance is a challenging task. The merger saga is far from over, as the enabling legislation needs to pass through the Parliament of the State of Queensland. Additionally, Federal Treasurer Jim Chalmers must determine whether the proposed merger aligns with the national interest, a decision that is sure to be controversial.
The national interest test allows for considerable discretion on the part of the treasurer, potentially enabling him to override the Tribunal’s decision. The outcome of this determination will be closely watched by Australians, who may sway the treasurer’s decision through their reactions. Chalmers will face pressure to present himself as capable of making tough decisions and being an economic rationalist.
Whatever the outcome, it is clear that any concessions made in the merger proposal will be subjective and require careful consideration. Suncorp, the entity subject to acquisition, has provided services to a range of sectors, including home loans, businesses, and agri-businesses. It is crucial for Australia to have tribunals and government ministers who are dedicated to protecting consumers, as well as supporting wealth creation and job growth.
No matter which way the treasurer decides, criticism is inevitable. The decision will be closely scrutinized by all parties involved. Ultimately, it is essential to have a banking sector that prioritizes the needs of consumers and fosters a healthy economy. The outcome of this merger proposal will provide valuable insights into the future direction of Australia’s banking industry.
Please note that the views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.
