Bank Merger

The author does not own any banking shares...

So 2 of the 5 biggest banks in Australia are proposing to merge (or 1 is taking over the other 1, depending on your point of view). A representative of Westpac yesterday said that the merger will not result in the closure of branches and will not result in a reduction of services.

Well, I don't believe them.

In the Frankston C.A.D. (Central Activities District) there is a Westpac branch and a St George branch. They are less than 100 metres from each other. One will go. I know this because once upon a time there was a Westpac Branch and a Bank of Melbourne branch. Now there is no Bank of Melbourne branch...

The reduction of services argument is amusing; not least of which because it is always amusing to see the words "service" and "bank" on the same page. Too simplify the argument, let's say that right now Westpac has 25 lending options and St George has 25 lending options. If the two banks merge there will not be 50 lending options. In order to provide us with better service and to avoid confusing options the combined bank will remove the lending options that are similar as well as those that are not profitable.

If Westpac had a long term plan of retaining all the St George Bank branches, products and services they wouldn't bother buying it. It doesn't make any business sense to do so.

The only people who will possibly benefit from this are shareholders in the banking sector, but any gains made there will probably be torn up by increases in fees and interest rates anyway.

Megacorporations are not good for competition and they are not good for the consumer. Australian retail and business banking is dominated by a small number of megabanks between whom there is no competition whatsoever. Each bank puts its interest rates on lending up safe in the knowledge that all other banks will follow suit. Each bank charges exorbitant penalty fees confident that none of its "competitors" will undercut the lucrative fees market by reducing their fees.

This merger will probably have to be cleared by the Federal Government. The Federal Government works for us. Regardless of which Party your local representative is from he or she will have an influence on the decision. It's going to be up to us to influence this decision. Write to your local members and tell them that you are against the decision. Politicians work on a theory that for every letter they receive, 100 people feel strongly about the issue. If all the readers of this blog write in, we will have the pull of 800 people!

If you don't know who your local member is, here's the AEC website with the details:

http://apps.aec.gov.au/esearch/

follow the prompts and it will take you to your electorate and then to your local member.

Banks in Australia are absolutely protected. Banks in Australia have free reign to do what they will to whom they wish. In the name of a free and fair market in Australia, I urge you to stand up to them, and give your Members of Parliament the support enabling them to block this takeover. In fact I urge you to demand that your Members of Parliament do this.