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Banks welcome review with reservations
8 May 2017
James Foot and James Eyres
Australian Bankers' Association chief executive Anna Bligh says there is little left for a banking royal commission to investigate with 15 separate inquires into the sector under way including the Productivity Commission's review into competition.
"We are getting very close to a full suite of issues that the public would want to look at. With this inquiry now about to start we are running out of things for a royal commission to look into," Ms Bligh said.
She said the industry did not want to speculate on what might flow from a focus on vertical integration in financial services - which could see the bank's retail and wealth arms separated - but had faith in the PC's processes.
Treasurer Scott Morrison on budget night will announce a Productivity Commission inquiry into financial system
competition as revealed by The Australian Financial Review on Monday.
"If they do identify any competitive concerns with vertical integration of financial services I would expect that they would comment on the best way to deal with that and provide some road map to both business and government."
Westpac chief executive Brian Hartzer said having the Productivity Commission looking into competition in banking "was a good thing" on the day his bank announced a $4 billion first-half profit. He said confidence in the system was a must and that many Australians were typically under-insured and under-advised.
"While we don't particularly enjoy yet another review we do think the Productivity Commission is a good place to look at this issues. It is important consumers have confidence in the level of competition in the industry and we will be happy to participate in that" Mr Hartzer said.
But he said the structure of the Australian banking industry was a function of its size, and and move to interfere with the architecture would need to consider the this and the desire of foreign investors to invest in stable and strong banks.
"This is very competitive market. We feel that competition every day, both from traditional large banks' competitors and increasingly regional banks and smaller competitors and fintechs. You name it - there are lots of people competing in this market and for the provision of core banking products, there are dozens of providers in almost every category," he said.
"It is important to remember we are a small market by global standards, at time when customers are expecting a higher quality of technology and digital banking capability, and regulators are expecting a stronger level of capital and..strong funding position.
"Overseas investors want to know the banks they are lending to are strong and sustainable. I don't think there is any surprise in the evolution of the structure of the banking system, and I don't think focusing purely on the number of competitors in the market is the best way to assess competition."
"Competition should be assessed on the deal customers are getting, on the quality of service customers are getting, the range of innovation customers are getting - and I would argue very strongly, on all three of accounts, that Australian customers do very well."
A spokesman for ANZ said: "While we believe the market is already highly competitive, we look forward to contributing to the review and we're committed to providing our full support to the commission."
A spokesperson for the Commonwealth Bank said it also supported the commission inquiry. An NAB spokesman referred previous statements made by the bank supporting periodic competition reviews.