Westpac has compared itself to a banana smoothie maker in an animated video attempting to explain how the GFC forced its hand on interest rates.
The video was originally made for staff, but has since been sent out to mortgage holders.
Delivered in the form of a children's parable, the three minute video clip depicts a storm that destroys the banana crop making the cost of buying bananas more expensive and hence driving up the cost of making the smoothies.
"A + B = C, right?" the voice over says, "...but the same formula seems so hard to understand when it's about money, about lending, about mortgages, about banking."
Following a series of animations showing the impact of the GFC on other countries and banks, Westpac explains that when a storm blows in it has to "batten down the hatches and make the foundations secure".
However the bottom line is that borrowing money has become more expensive, Westpac explains meaning "there really is no other choice" but to raise rates.
The video comes as the bank continues to come under heavy fire following its decision to bump up rates by 45bps, nearly double the RBA's 25bps cash rate increase announced last week.
The video was panned by Stephen Pearson, head of the ad agency Lowe Worldwide, who told SMH it was "quite childlike" and for any educated person would seem condescending.
The video can be viewed on the SMH website.
Latest Comments
Total:
22
comment(s)
B1 & B2 on
09 Dec 2009 12:24 PM
Hilarious Westpac, what an absolute insult to all your customers. I have always wondered why bananas have never come back to the original price ($2-3 kg) prior to the massive storms in Queensland last year. Seems to me that the farmers get paid about the same and then the supermarket cartel (think major banks), sense an opportunity to gauge the customers for whatever they can, just like the major banks do. Hey we used to pay up to $12 a kilo a year ago , so $4-5 kilo is now the new cheap, irrespective of the weather in Queensland.
However my local fruit shop ( think non banks) can sell better quality bananas at 30-40% less than the supermarket does, guess were I buy my bananas?
As the son & grandson of ex fruiterers I feel so much more informed due to Westpac’s analogy. In fact it makes me wonder why I ever bother doing accounting at University, when we have the likes of Westpac sharing such riveting information!
A + B = $ on
09 Dec 2009 12:37 PM
What westpac and none of the banks can escape is that despite their bleating about increasing borrowing costs all of the big 4 have just reported the best margins on loans for years. How does that mathh work?
jeff on
09 Dec 2009 12:49 PM
How good are these guys? Not only are they ripping customers off with excessive rates, but they want us brokers to flog these overpriced products, or they cancel our accreditation. JOKE!
David on
09 Dec 2009 01:03 PM
ast week, Bank of Qld raised $1.1 billion funding at 50bp above the bank bill rate. In January they had to pay 115bp above. That''s a drop of 65bp. Where''s the increasing cost of funding? I''m sure Westpac can raise funds cheaper than Bank of Qld so they''re really close to where they were before the GFC whilst charging all their customers around 1.5% more.
Bananas are over rated on
09 Dec 2009 01:14 PM
The bottom line is...the business is more important than the people it is designed to serve. A sound business would have a risk mitigation policy in place BEFORE the storm and an emergency plan of co-operation to ease the pain of those who fell victim to "the storm" because they were not informed of its approach. If you want an analogy, think of the bushfires...what would we think of a business that deliberately took advantage of those who (through no fault of their own) were vulnerable, in pain and in shock. A business with such a plan would be justifiably condemned by all Australians. It amounts to looting and is a criminal act whichever spin is masterminded to attempt to protect its image. Australians are too sophisticated to swallow this "We have no choice" and "it''s for a better future" garbage. Reality is...it''s because the Banks assume their own importance is more valuable than people. Big mistake, huge. While there is no alternative, people will pay what they are forced to pay, but as soon as there is an option to choose, the hostility created by these actions will be remembered and retaliated. It is human nature. You kick me while I''m down and I may not be able to defend myself but when I am again fit and well, I will gather my supporters and track you down. Kings have fallen and kingdoms lost over less. In a disaster, everyone must work together for a sustainable recovery. Those who "have" give to those who "need" and their reward is appreciation which evolves into loyalty.
Ken Bruns on
09 Dec 2009 01:29 PM
I''m sure the Advertsng Agency thought that ad was realy ''a peeling''. Could someone please tell Ms (Ned) Kelly that what would work ia a story that shows that Westpac is actually getting a tighter point spread than it was before the GFC, but I can''t see that one happening, can you?
David on
09 Dec 2009 01:52 PM
Very well put Westpac, what did you do when you were making millions of profit, was any returned to public/customers via fees/ lower interest rates? The answer is NO, so how suddenly you have reasised on profits? This is a big rip off and end of the day Westpac customers have to pay the price? Is there a company out there that can take on these customers and if there is can you please come up with a proposal for a transtition so we can promote your product and a transtition for all concerned customers to move from Westpac, loyalty is no longer a favourate word.
after the storm on
09 Dec 2009 02:06 PM
In second tier economies, the philosophy is: I need x$ per day. If there are less people buying, the price must go up so that I still get my X$. Sounds to me that Westpac and its supporters have a second tier mentality. What happens when nobody buys? Or even worse, when the only sales are made to desperate buyers who cannot maintain paying the price? The cost of selling becomes even more expensive and the short term fix becomes a fast track to self annihilation. Who advises this approach? What supposedly sophisticated business buys such advice? Westpac, you need a long term approach if you intend to stay in the game for the long term. Enjoy your short term windfall while it lasts
Ceasar on
09 Dec 2009 02:42 PM
Shouldn''t the ACCC take action to investigate Westpac''s:
- interest-rate rip-off of customers
&
- forcing of minimum loan quotas on brokers that threatens broker jobs, undermines and ruins the broker-industry proposition for consumers, reduces competition, misuses their major-bank power through bullying tactics on brokers & thus consumers, guarantees Westpac income through forced minimum sales (regardless of Westpac''s service+product offering for consumers)
Broker on
09 Dec 2009 02:51 PM
According to todays ninemsn poll, 87.06% of responses think that this stupid banana video release is patronising towards it''s customers.
How could their media/ PR area get it so so wrong, are they using the same mob that make CBA''s stupid TV commercials???.
Just how out of touch can they be?
I''m getting the feeling that banks are are hated more than ever before, if that was ever possible....
People have very long memories, what the banks have been up to since the GFC will come back and bite them harder than they can ever imagine.
banana bob on
09 Dec 2009 03:03 PM
If I ran a banana smoothie manufacturing operation and wanted to truly remain price competitive in an environment of challenging banana prices I would look at removing staff not directly associated with the production of the said smoothie - IE the PR team , the marketing team & countless no''s of middle and senior management that contribute ZERO to the manufacture of said smoothie - that would be the real solution.........
Steve on
09 Dec 2009 03:22 PM
When will banks learn that price is not derived from cost plus margin, in fact margin is derived from price less cost. How glorious to have such an oligopoly!
A not very smoothie ride on
09 Dec 2009 03:23 PM
You''ve got to wonder who at Westpac thought it was a good idea to send customers this video, which has only served to fuel the fire even more. NAB especially must be loving this!
SteveL on
09 Dec 2009 03:31 PM
This whole issue goes much deep then just margins. The fact is, the BANKS are a law unto themselves and are not regulated. We all need to undertsand...finally, they are PROFIT MACHINES pure and simple. For a BANK to put a friendly face on is akin to Osama Bin laden acting as a CSO for an airliner prior to 9/11. He knows what his agenda is and is sucking people onto the planes so he can maximise his profits (Victims). BANKS nowadays are just too big and powerful and have by far the largest and most expensive lobby groups in the Country. That is why the message from Wayne Swan is an empty one. It is as dodgy as can be and they look at Brokers as being dodgy? Pathetic! As for this ad, how patronising can you get?
Over it on
09 Dec 2009 03:39 PM
I was at a Westpac function last week. The Westpac BDM was bemused that Brokers were still complaining about commission cuts. Someone suggested that Brokers will get over it when they see Westpac staff get a 35% pay cut. The Westpac staff present were blown away by the thought we''d even think such a horrendous thing.
Broker2 on
09 Dec 2009 03:56 PM
Will DOCEP & ASIC be auditing those WA brokers who sell overpriced Westpac products to retain their accreditation?
Will Westpac cancel accreditations on volume when it is clearly not in the Broker''s interest to sell clients a less than best option and risk losing their license?
kevin collins on
09 Dec 2009 04:17 PM
Its beyond belief that Ms Kelly who is paid Millions, would give approval for that child like advertisment.
It just goes to show , you dont have to be real smart to be paid big money.
Damien on
09 Dec 2009 06:38 PM
Banana smoothies adds, CBA basketball adds.
Hey, I know nothing about producing commercials but I can "wing it" and I''ll happily have a crack at it for half what they are currently paying these morons!
Must be so satisfying to make that much profit you can just Pi** your advertising budget up against the wall, whilst damaging your already damaged brand. Do they ever learn, it appears not.
Banks are like governments, outstanding at revenue raising, but pathetic at everything else.
Robert Kaya on
10 Dec 2009 12:15 AM
In a free market economy we have, I am very much in favour of deregulations.I, therefore welcome Westpac''s decision to go over the top which is likely to promt some significant ''cut-throat'' competition in the industry.Westpac, PLEASE do NOT revoke your decision!We have been longing a very healthy competition for quite nsometime!
Tony Hervey Bay on
10 Dec 2009 10:06 AM
Don''t trip on those banana''s Gail. Not sure there will be any customers or brokers willing to come and give you a hand up. Funny how when you reduce brokers income by 35% overnight, and play with their businesses by cancelling accreditations and charge the customers more than you should, there just doesn''t seem to be a lot of love left in the air. May your smoothies remain unsold!!
Broker Watcher on
10 Dec 2009 11:30 AM
This analogy conveniently ignores the fact that due to the GFC there are less competitors producing banana smoothies and Westpac & Co are now selling more smoothies. Their overall margin surely must be higher than pre-GFC levels despite the higher cost of bananas.
If the monkey''s at the banks peeled the banana''s a little faster at least our customers would get their overpriced smoothies a little faster.
Homeside is now selling cheaper smoothies but we all know they don''t taste so good.
CBA has put a minimum quota in place for the banana smoothie brokers to slow them down. The industry body is trying to support their professional banana smoothie brokers but we all know this is not about quality.
ANZ hinted they did not see the need to increase the price of their banana smoothies over and above the price set by the regulator but could not resist the temptation to do so.
Then of course their are the poor old banana smoothies managers who can''t compete because their banana''s are far too expensive.
Will all the banana smoothie suppliers play ball with Macqaurie''s wonderland or will Santa arrive before Alice?
Damien on
11 Dec 2009 11:34 AM
NEWSFLASH.....
Safeway in Melbourbe have today avertised their bananas at , wait for it $ 1.68 per kilo , down from about 4.75 Kg from last week.
Over to you Westpac!