Staggering bank profits hurt consumers, says COBA Chair

15 May 2014

Don Magin, Chairman of the Customer Owned Banking Association and Chief Executive Officer of the Hunter-based Greater Building Society, on creating a level playing field for customer owned financial institutions and the major banks.

“The four major banks (NAB, Commonwealth Bank, ANZ and Westpac) have announced they are on track to post record annual profits of a staggering $30 billion.

Having strong, well run, major banks is a good thing. The problem is that the pendulum has swung too far towards stability and too far away from competition. The major banks have obtained these results because of an unfair competitive advantage.

The profits can be used to further erode the competitiveness of Australia’s banking system. Record profit is good news for those fortunate enough to have shares in banks but it is ultimately hurting local consumers and businesses.

Other financial institutions that are trying to keep the banks honest, offering competition to drive rates down (for mortgage holders) and up (for investors), are competing hard but the playing field is not level. The implications are significant for the Hunter, one region where a disproportionate number of people bank with a customer-owned financial institution (building society or credit union) rather than a major bank.”

Source: Newcastle Herald, Opinion: Staggering bank profits hurt consumers, 12 May 2014