Minor mortgage players feel the squeeze
May 26, 2009
The banking sector’s so-called ‘Big Four’ is possibly morphing into a Big Two, while regional banks and non-banks continue to be squeezed - according to new research that has the ACCC concerned.
A banking industry review by Brandmanagement found that, while all of the Big Four expanded their mortgage books in the March quarter, Australia’s two giants in the housing sector - Westpac and Commonwealth - had taken a disproportionate share. Following the CBA-BankWest and Westpac-St George Bank mergers, the two companies have claimed around 85 per cent of mortgage growth amongst the majors during the period.
The report, obtained by The Australian, discovered that $22.7 billion of the $26.6 billion growth in mortgage books by the majors in the March quarter was achieved by CBA/BankWest ($15 billion growth) and Westpac ($7.7 billion).
ACCC Chairman Graeme Samuel indicated at the time of approval of the CBA-BankWest deal that the competition watchdog was unhappy with the deal but had little option but to approve it. He has now added that further consolidation in the sector would now be unlikely.
The statistics underlined the power of the Big Four as the “flight to safety” since the credit crunch has taken off. They now hold 72 per cent of outstanding mortgages by value ($730 billion), markedly higher that last year when they commanded a 57.5 per cent share ($539 billion).
Banks outside the Big Four saw a $1.8 billion net decline in their mortgage books in the March quarter, with Macquarie Group, Bendigo and Adelaide Bank and Citi recording falls.
“We are increasingly concerned about the potential for a less than intensely competitive structure developing amongst the banks and the non-bank financial institutions as we emerge from the global financial crisis,” Mr Samuel said.