Australian Regulator ‘Unlikely’ to Approve More Bank Mergers

Dec. 6 (Bloomberg) -- Australia’s chief competition regulator says there’s little chance he would allow further mergers between major and regional banks in the wake of the global financial crisis.

The nation’s banking industry has changed significantly in the past year, and there is less competition, Competition and Consumer Commission Chairman Graeme Samuel told ABC Television’s Inside Business program today.

Any proposed mergers would be examined critically, based on existing and likely future competition, he said.

Treasurer Wayne Swan maintained his rage against three of Australia’s biggest banks for raising interest rates more than the central bank, accusing them today of “taking families for a ride this Christmas.” The Reserve Bank raised its benchmark rate by a quarter point for an unprecedented third straight month, to 3.75 percent on Dec. 1.

Commonwealth Bank of Australia, Australia & New Zealand Banking Group and Westpac Banking Corp. all raised their home- loan rates by more than the official-cash-rate increase. Smaller St. George Bank Ltd. also raised by more.

“I think you would have to say that it would be a difficult ask to see any more of the regional banks moving into the fold of the major trading banks in light of the global financial crisis,” Samuel said.

“There’s even a question that you might ask, that if Westpac were to seek to acquire St. George today rather than prior to the global financial crisis, whether we’d have the same view as what we had back then.” Westpac bought St. George in 2008.

Less Competition

Samuel said local banks have less competition as foreign banks exit institutional lending and non-bank lenders stop residential mortgage loans.

“So there’s less competition. Generally when you’ve got less competition, you’ll have higher prices being charged,” he said.

The only way the competition commission can act is to block mergers that may be anti-competitive, Samuel said.

“One should never say never. What we have said is we will examine these very critically in the context of both competition in the banking market today, but more importantly the likely prognosis for competition into the forseeable future.”