Business

Banking landscape has changed

AUSTRALIA'S banking sector has become increasingly concentrated since the global financial crisis, a Senate inquiry was told on Wednesday.

Professor Kevin Davis, of the Australia Centre for Financial Studies, was among several witnesses who told the inquiry that the landscape of Australian banking had changed since 2007.

Professor Davis pointed not only to increased concentration in the sector, but also told the committee that "ring fencing" should be considered as part of a wider review of the banking system.

Ring fencing, as he described, was the practice of separating high-risk, high-return business units from the main business of banking and loans under a separate corporate governance structure.

While he did not go as far to suggest it should be taken up, as is being considered in the United Kingdom, he did say it should be part of the discussion.

His comments came days after the mutual funds sector released a report saying the industry was too concentrated, particularly as a result of buyouts of regional banks BankWest and St George by two of the Big Four.

That report, from Deloitte Access Economics, said regulatory emphasis on stability had swung too far and was affecting smaller credit unions and building societies ability to compete.

But Steven Munchenberg, chief executive of the Australian Bankers' Association, said any concentration in the market was due to changes resulting from the crisis, not due to actions within the domestic industry.

"We believe that our regulators and the operation of the banks have got the balance right between stability, competition and risk," he said.

"This does not mean that Australian banks are immune to the overseas developments - clearly funding costs is the most acute example."

Mr Munchenberg said while some suggested the increase concentration of the banking and finance market may have been part of acquisitions and consolidation, it came about from "economic and market practises... not from harmful practises".

The Senate inquiry will report its findings on October 1.

Topics:  banking, gfc



Join the Community.

Get your local news, your way.

Stay Connected

Update your news preferences and get the latest news delivered to your inbox.

Calm weather with up to two-metre swells at Tweed

Waves might look like this.

Surf conditions for the beach this weekend.

Feast of street food trucks into Harbour

FEAST FOR FOODIES: Mat Whalley, Kat Creasey, Chico Green and Trevor Braga from Food Kartel and Destination Tweed CEO Bill Tatchell are looking forward to the Tweed Food Truck Extravaganza.

Food Trucks will descend on Tweed Heads for a street food fiesta

Upmarket beach townhouse

Real Estate: 4/45 Kingscliff Street, Kingscliff NSW.

Take a look inside this stylish Kingscliff townhouse conversion

Latest deals and offers


British family bashed in Thailand

Family beaten and kicked unconscious by gang in Thailand.

Family beaten and kicked unconscious by gang in Thailand.

Ben Hunt wary of Sharks Halfback

Ben Hunt of the Broncos looks to pass during the round 23 NRL match between the Brisbane Broncos and the St George Illawarra Dragons at Suncorp Stadium.

Ben Hunt talks about Cronulla's Chad Townsend.

Broncos prepare for Sharks

Defensive training session at the Broncos

Tough defensive session in preparation for Sharks game.

How a sacked real estate agent made $725k in four months

Agent is now under investigation by the industry watchdog

VIDEO: Art Deco fan pays $835,000 for Imperial Hotel

No Caption

Iconic "Impy" sold at a bargan price to bidder who loves Art Deco.

RBA warns of future apartment oversupply

Toowoomba: Crest Apartments and Burke & Wills, Ruthven Street ( view from Neil Street) Photo Bev Lacey / The Chronicle

RBA says oversupply of apartments poses risk to household finances