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BoQ Chief Demands ACCC Ensures Greater Competition In Banking
David Liddy, chief executive of regional lender Bank of Queensland (BoQ) has called for the Australian competition regulator to become more involved in ensuring greater competitiveness in the Australian banking sector, as the industry becomes increasingly consolidated between the major players.
Mr. Liddy made his comments during the lenders annual general meeting in Brisbane, and said that the consolidation that has resulted from Westpac’s merger with St George and CBA’s acquisition of Bankwest was not good for customers.
“The last 15 years where there was an increasing number of competitive banking players is now almost completely reversed. If the majors have waited 15 years to gain a monopoly, they’ll be willing to take on any short-term conditions. The ACCC should take a more proactive role in monitoring competitive behaviour.” Mr. Liddy said.
In an interview with the Australian, Mr Liddy said that whilst present conditions presented an opportunity for the lender to capture market share from the majors as a result of the interest rate controversy, BoQ has been held back by costs.
BoQ has higher funding costs that the major lenders, illustrated by this week’s $1.25 billion deal which cost the lender 200 basis points above the swap rate, 80 basis points in excess of what A Big Four bank would pay for similarly sized funding.
In order for BoQ to take advantage of the Sovereign Guarantee, BoQ must pay the government 150 basis points, whilst the Big Four who are higher rated are required to only pay 70 basis points.
“We want to be an alternative bank to the majors, but we are still on the back foot on costs.It’s still a real thorn in our side, it’s a restrictive force for us. But while there is the interest rate debate going on, we are still trying to make hay while the sun shines but it’s difficult to compete on price.” Mr. Liddy said.
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