National Australia Bank (NAB) and Australia and New Zealand Bank (ANZ) held secret talks in 2008 to merge, but plans were scuttled by the Federal Government The Australian reports.
According the newspaper, secret high level talks were held between NAB and ANZ prior to the onset of the Global Financial Crisis in 2008 with the aim of breaking down the Federal Government’s “four-pillars” banking strategy with a merger to take advantage of certain “social synergies” the banks offered each other. But after ‘behind closed doors’ lobbying of the Federal Government, which intensified after the announcement of a Westpac merger with St.George in May of that year, the plan was abandoned.
NAB chairman Michael Chaney was earmarked for head of the board of any merged entity, with ANZ chief Mike Smith assuming the chief executive role with NAB holding back on naming a replacement for the former chief John Stewart during discussions The Australian reports.
Previously former ANZ Banking Group chief executive John McFarlane had earmarked an end to the Federal Government’s “four pillars” banking policy while speaking to an Australia-Israel Chamber of Commerce lunch in 2004.
“There’s a good chance it is inevitable but I wonder whether it will happen in my time,” he is reported to have said in the SMH.
This foreshadowing of ANZ’s attempted merger with NAB suggests ANZ has long sought an merger with one of the big four banks but was waiting for the political environment to change in its favor.
The Federal Government’s “four pillars” policy aims to increase the stability of the Australian banking system by ensuring no one bank is too big to fail and grows so large that smaller competitors can never emerge in an environment dominated by unfairly large competitors. The big four (ANZ, NAB, Commonwealth Bank and the merged Westpac/StGeorge entity) oppose this policy as they believe by artificially limiting their potential size, it makes them internationally uncompetitive.
Former Reserve Bank governor Ian Macfarlane attributed Australia’s banking stability during the global financial crisis to the four pillars policy in 2009.
