'They’re not viable': Smaller banks face an uncertain future
Competition authorities want more smaller banks in Australia. But economic forces are driving mergers and acquisitions to deliver scale.
“Suck it up little bank,” the deputy chief executive of a major bank told a representative of a smaller one.
That was in 2014, at a closed door industry forum, when the industry was debating its approach to the Murray Financial System Inquiry. And it was about what smaller banks saw as the unfair advantage the 'Big Four' had in regulated capital.
But the tension went much deeper. And remains today. Indeed, we are entering a period when scale in banking is more and more significant, threatening the very structure of an industry which has historically supported local, specialised mutuals as well as big national and multinational banks.
“It is about scale — driven by technology, costs and a large part is regulation,” says Peter Lock, the chief executive Heritage Bank, which merged with People’s Choice Credit Union in March to form Australia’s largest mutual and a top 10 bank.
