An Australian customer-owned bank has urged the government to act now to curb the unfair advantages that Australia’s big banks enjoy.
chairman, Kerry Betros told the Heritage Bank
Annual General Meeting that millions of Australians were being shut out of a better deal on their banking because the big banks could sidestep hurdles that customer-owned competitors had to jump over.
If the government is serious about making banking more competitive, then it needs to start walking the walk, says Betros.
“Governments have talked up the benefits of competition for years. Now is the time to deliver real reform. The current Financial System Inquiry is the perfect opportunity to tackle the inequities,” he said.
“The big banks enjoy a huge advantage because they are authorised to use the internal ratings-based (IRB) approach to measuring the riskiness of their assets, which significantly reduces the amount of regulatory capital they have to hold.
“They also enjoy ‘too big to fail’ status, with the implicit guarantee that the Federal Government would bail them out if any of them got into trouble.
“Those factors give the big banks huge funding advantages that tilt the playing field against smaller customer-owned competitors such as Heritage.”
Betros said that the bank’s solid 2013/14 results prove they can be a genuine alternative to the major banks.
The lender’s after-tax profit increased by 2.2% from the previous year while loan approvals were also up 7.5%, reaching a total of $1.440 billion in the 2013/14 year. Heritage also grew its total consolidated assets marginally to $8.519 billion, an increase of 0.1%.