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Should bank mergers be reversed?

Is it too late to prevent CBA and Westpac from swallowing up the second-tier?

Associate Professor Frank Zumbo, a leading competition expert from the University of NSW, thinks these banks should be stopped in their acquisition tracks.

He recently told the Senate economics committee that, even at this very late stage, the Australian Competition and Consumer Commission should still ask the Federal Court to force CBA to sell BankWest, and Westpac to sell St George.

Zumbo thinks each takeover has demonstrably lessened competition in the banking sector. Do you agree with his assessment? And even if you do, isn’t his merger-stopping remedy far too radical?

The prof is even worried that the Big Four could one day become the Big Three. “My deepest concern is that there will be conversations or thought given to the ANZ and NAB merging. Yes, there’s a four-pillars policy in place prohibiting further mergers, but it is only a policy.'”

Are his worries wacky, or do you also feel that banking competition is in serious danger? Let us know your thoughts below.

Comments (5)

  1. The Big Four have now virtually displaced all other mortgage providers – that’s not proper competition.

  2. Tell ‘im he’s dreaming. Not in a million years would the banks be forced to split apart after merging. It would be a huge embarrassment for them, the gov and the comp commission too. never happen

  3. If BankW and StG were spun off, they would probably fail. there’s a reason they were taken over in the first place. australia’s not a big enough market for them to all compete in. 4 strong banks is about right for us…stop all this moaaaning about the big 4 being bullies etc etc

  4. Firstly the banking industry in Australia need to invest more on technology then thinking of getting bigger. I am suprised that the Banks here don’t have Cash Deposit Machine, Cheque Deposit machine and Passbook update machine. It is also shocking to note that there is hardly more than 2 ATM machines in most branches…Perhaps the big banks should look into this seriously.

  5. Can Frank perhaps show us another retail sector with four large, strong competitors. Umm…
    telecommunctions, no
    supermarkets, no
    health insurance, no
    anything in utilities, no

    Help me Frank!

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