While Australia’s ‘big four’ banks claim to be fiercely competitive a new analysis by The Australia Institute shows that in fact over 53 per cent of each bank is owned by the same small number of institutional shareholders.
The rise and rise of the big banks by Senior Research Fellow David Richardson examines the top 20 shareholders of each bank and finds that the degree of common ownership seriously challenges the idea that there are four independent big banks.
“The big four banks make more than $1,460 profit from every man, woman and child in Australia. They argue that these profits flow largely to mums and dads with superannuation, but our analysis calculates that the average superannuant gets just $142 per annum while most Australians get nothing,” said Mr Richardson.
“These institutions don’t own a big slice of just one bank; they own a big slice of all the big banks. The last thing these common shareholders seem to want is genuine price competition and this week’s interest rate decisions illustrate that.”
After the NAB attempted to ‘break up’ with the other big banks on Valentine’s Day 2011 it was reported that its major shareholders were unhappy with the strategy and put pressure on the CEO to raise rates in line with the others.
“While the big banks’ spokespeople manage to keep a straight face when they claim to be fiercely competitive the joke is on the Australian public. While they claim their funding costs are rising, the fact is that it is their profits that are going through the roof,” said Mr Richardson.
“Australia’s big four banks already make up four of the eight most profitable banks in the world. Our analysis of the concentration of ownership raises serious concerns about the potential for them to boost profits further by acting as a monopoly.
“Australians who are worried about the cost of living should focus on the potential to make significant savings if they switched to a mutual, credit union or building society,” concluded Mr Richardson.
The last time the official interest rate was 3 per cent in 2009, the average mortgage rate with the big four banks cost 5.8 per cent. Today the big banks are charging: Commonwealth Bank 6.40% Westpac 6.51% National Australia Bank 6.38% ANZ yet to announce.