The Australian Bankers’ Association (ABA) has come out and labeled the current debate on banking regulation in Australia spearheaded by Labor’s Wayne Swan and the Liberal’s Joe Hockey as “long on rhetoric but short on facts”.
With Commonwealth Bank’s home loan rates increasing by 0.45 percent last week, almost double the Reserve Bank of Australia’s 0.25 percent increase in the official cash rate, the bank’s have come under heavy criticism from both Wayne Swan and Joe Hockey, with both treasurers trading blows on the issue of banking regulation.
Steven Münchenberg, Chief Executive of the ABA is on the defensive over the issue.
“We welcome a vigorous debate about banking in Australia, but that debate must be based on fact, not just blind assertion. Calls for ever greater levels of costly regulation are being based on assertions that there is no competition in banking, yet there is no evidence to support those claims.”
“Those politicians, interest groups and unions calling for more and more costly regulation need to produce the evidence that there is insufficient competition. Claims of massive falls in competition make fine rhetoric, but a proper debate on banking needs to be based on the facts, not misguided myths” Münchenberg said.
Two weeks ago it was announced that National Australia Bank’s net profit was up a massive 63.2 percent on 2009, earning $4.22 billion for the financial year ending June 2010. The ABA claims that while NAB and other Australian banks have returned significant profits this year, as measured by the standard return on equity indicator, are lower today than they were in the 1980s, and well down on pre-global financial crisis levels.
“Banks operate in a competitive set of markets. We welcome debate on sensible measures to further enhance competition in the banking sector to improve the outcomes for customers, but to punish with costly regulation is counter-productive.” Münchenberg said.