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Fresh from announcing a combined $13.69
billion in profits, 3 of the 4 big banks
have jacked up their rates by more than
the 0.25 per cent announced by the Reserve
Bank of Australia on Tuesday last week.
Westpac stunned its customers, commentators,
politicians and competitors by moving
rates up 0.45 per cent, so much so that
the other banks took the rest of the week
waiting for each other to move, and to
work out what to do.
A report in the Sunday Telegraph of 5
December headlined ‘Rate Rise Rort’
reveals how the banks have used firstly
the GFC rate reductions and now the rate
increases to gouge $3000 a year from all
of us. If they had not ‘de-coupled’
from the RBA moves, we would be paying
5.57 per cent on mortgages, not the 6.76
per cent charged by Westpac, who now lead
the pack. In a grab for new business,
NAB moved at the RBA rate, and now offers
6.49 per cent, about a quarter per cent
lower than Westpac.
The report calculates the impact of
these extra fees as costing us a combined
$7 billion a year (which accounts for
50 per cent of their annual profits).
We must be a very tolerant nation to accept
such a rort!
While treasurer Wayne Swan sounds outraged
on the touchlines, it is the huge protection
in the form of guarantees that were approved
for the banks without any checks and balances
that has enabled them to swallow up the
competition, and take almost complete
control of the banking and lending landscape.
Their power and dominance has gone to
their heads.
In the same article, Professor Milind
Sathye of the ANU observes that Canadian
banks lend from the same sources, and
operate with a 2 per cent mark up, compared
to the 2.8 per cent of our Big Four. (The
mark up is the margin spread i.e. the
difference what banks pay to borrow money
and what they charge to lend it.)
On behalf of clients, we will be doing
all we can to exploit the competitive
environment that does exist, and play
the banks off against each other. After
all, they do want to increase their share,
despite the way they treat the customers
who have already given their bank support.
What they don’t realise, of course,
is that through making themselves so off-side
with the government and the whole population,
they are preparing the way for a sharp,
lean new banking operation who comes to
set up in Australia and exploit the intense
dislike and distrust of our banks, and
their lack of competiveness and high costs.
Someone like Virgin Bank…Now that
would be nice. Or a low cost Internet-driven
provider. “Yes please”, we
say, as there’s nothing like some
tough new competition to upset a cosy
cartel like our Big Four banks.
If you would like to learn more and discuss
how McCarthy Group can assist you, click
here.
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