Australia’s Big Four Banks “National Champions”

Post by Sharat on November 23, 2009 · Under Australian Economy, Business News, banking · 1 Comment

One of Australia’s most influential fund managers says he is extremely bullish on the performance outlook for the Big Four banking groups over the next five to ten years and suggests that the Federal Government as a matter of policy, will do everything possible to sustain lending.

Last week, David Deverall, managing director at Perpetual predicted that lenders would need to accept tighter regulation, in return for government policy which favours their growth.

Such policy could include the continuation of the Federal deposit and wholesale funding guarantees.

Mr. Deverall says he believes the deposit guarantee limit should be reduced to $25,000 from the current $1 million, adding that he believed that the Henry Report on taxation, which will be released next month, would recommend favourable tax treatment for retail deposits.

The Federal Government would likely keep the Big Four’s smaller regional rivals, who were hit hard by the financial crisis “alive but on life support” in order to assuage concerns held by the Australian Competition & Consumer Commission and regional politicians.

Mr. Deverall says he believes Australia’s main objective should be for the country to emerge as a regional financial services powerhouse, which could be achieved by leveraging the Big Four banking groups as national champions.

In return, the majors would have to accept more intrusive regulation of their compensation policy, as well as be prepared to face larger capital and liquidity requirements.

Mr. Deverall’s comments came during a financial services business conference held in Sydney last week, and were made more than a year after financial markets almost imploded in the wake of the Lehman Brothers bankruptcy, which resulted in the introduction of the Federal Government wholesale funding and deposit guarantee.

The fund management industry suffered badly as result of the deposit guarantee, which led to many investors redeeming their assets in favour of guaranteed bank deposits, a process known as “flight to quality”

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Tags: Australian Banking, Australian Economy, banking, Business, Business News, Fund Management, Regulation

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One Response to “Australia’s Big Four Banks “National Champions””

Australia’s big four banks are “national champions” - Viewsflow on November 24th, 2009 5:30 am

[...] a 5-10 year view. There happens also to be a strong seasonal tendency in the shares at this time.Close Forward this [...]

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