| Australia prepares for reform on banking sector |
| Date: 2010/11/4 Click: 1951 |
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Australian Federal Treasurer Wayne Swan on Wednesday said a reform package aimed at improving competition in the banking sector will put pressure on the major banks to better behave.
The Commonwealth, Australia's largest home lender, lifted its variable standard mortgage rate by 45 basis points on Tuesday.
The move came immediately after the Reserve Bank of Australia ( RBA) increased its cash rate by 25 basis points to 4.75 percent, the first increase since May.
The Commonwealth bank's variable standard mortgage rate was now 7.81 percent, effective from November 5.
Swan said the big banks were highly profitable adding that their net interest margins, profits on lending, had returned to pre-global financial crisis level.
"Clearly, (the big banks) have behaved in an arrogant fashion and, clearly, what we will do is make the system more competitive, to give more powers to the ACCC (Australian Competition and Consumer Commission) and put in place a range of further reforms to keep them honest," Swan told Herald Sun. "The behavior of the Commonwealth Bank has been arrogant to the extreme."
Swan said the government has been working on a reform package with regulators to put pressure on the major banks to behave in a better way, and reaffirmed the government's reforms will be announced next month.
According to Opposition treasury spokesman Joe Hockey, the treasurer should not wait until December to release the package.
Swan should release them now before the other three banks make any announcement about their rates, Hockey told ABC Television.
Hockey also said the government had not done a thing about a decline in banking competition following the global financial crisis.
Westpac, National Australian Bank and Australia and New Zealand Banking Group have yet to announce their intentions, but previously have flagged increases above official rate movements. |
