CBA Comes In For Intense Criticism Whilst Banks Say They Are Not Opposed To Reform
Despite the fact that CBA has lifted its lending rates by nearly double the official rate hike enacted by the Reserve Bank of Australia, Australian banks say they would be prepared to accept appropriate banking reform designed to increase competition within the industry according to the industry body.
Steven Munchenberg chief executive of the Australian Bankers Association on Tuesday defended CBA’s decision to lift its lending rates by 45 basis points, 20 basis points higher than the 25 basis point rate hike undertaken by the Australian central bank.
“We know these are unpopular decisions,” he told The Australian Online, arguing that funding costs were up on the deposit and wholesale fronts.
Mr. Munchenberg expressed hope that borrowers would appreciate the need for lenders to consider a number of factors when arriving at decision, and that their refusal to “bow to bullying by government” does not mean that banks are not justified in making their decisions.
On Tuesday federal treasurer Wayne Swan heavily criticized CBA for its decision to raise its lending rate by 45 basis points, accusing the lender of a “cynical cash grab”. Mr. Swan added that he would propose banking reforms next month, which would help increase competition within the banking industry.
Westpac, which on Tuesday reported and 84 per cent gain in full year net profits of $6.35 billion, said it would over the next few days consider whether to lift its mortgage lending rates.
Penny Wong, Finance Minister urged lenders to be cautious, saying that CBA customers had every right to feel upset over the bank’s decision to raise its mortgage lending rate.
“I would encourage other banks to consider how their customers perceive them moving from the official independent Reserve Bank increase,” she told ABC radio.
Wayne Swan said that if borrowers were unhappy with the behaviour of their lenders, they should shift their mortgage to another bank.
“Sometimes the only thing that these banks can understand is customers walking down the road,” he told ABC radio.
Despite the intense criticism, ABA chief Steven Munchenberg defended the right for banks to set their interest rates, saying that all lenders faced similar funding cost pressures, but added that the lenders would not be opposed to reasonable banking reform.
“We would welcome appropriate moves to increase competition,” he said.
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