News reports are suggesting that the Abbott government is working on deregulating Australia’s banking and finance sector, which could end the four pillars banking policy.
Fairfax Media is reporting that details of the Trade in Services Agreement (TiSA) negotiations show Australian trade negotiators are working on allowing foreign banks much greater freedom to operate in Australia.
World Trade Organisation members including Australia, Canada, Japan, South Korea, Taiwan and the European Union are all involved in the negotiations. Trade Minister Andrew Robb says the negotiations were a key part of his policy to open as many doors as possible for Australian financial services.
Perhaps surprisingly, Australia’s major banks strong support the process, with Australia and New Zealand Banking Group (ASX: ANZ) stating, “a significant opportunity not only for lowering barriers to trade for current parties to the negotiations, but also to set important targets for further liberalisation in the future by nations currently not party to the negotiation“. ANZ appears keen on the proposal, which would align with its stated goal of significantly growing its revenues from Asia.
If the banks support the move, you would think they don’t see much of a risk from a massive influx of foreign banks into Australia, which could see them lose market share to the newcomers.
Perhaps it’s their stranglehold on Australia’s financial and superannuation system, with ANZ, Commonwealth Bank of Australia (ASX: CBA), National Australia Bank (ASX: NAB) and Westpac Banking Corporation (ASX: WBC) all increasing their combined share of the market since the global financial crisis, including mortgages, financial advice and management of superannuation funds.
Increased competition would be good for consumers, and ‘smaller’ big four banks would lower the risks to our financial system. Bring it on I say.