Wednesday, 22 July 2015

Banking: Our Four Pillars

This is the logo for Westpac Bank. It started life in colonial Sydney in 1817 (yes, under the wonderful Governor Lachlan Macquarie) as the Bank Of New South Wales.

Australia has what is referred to as "the four pillars' of bankng. Four banks which dominate/share/hog banking business within our commonwealth of states: Westpac, Commonwealth Bank, National Australia Bank (NAB), and Australia New Zealand Bank (ANZ). We also have a swag (lots) of building societies, and credit unions,which service those people and businesses who do not like to fit in a pre-determined mould. Banking regulations are set by a combination of the federal government (not state governments), and the Reserve Bank of Australia (RBA). The RBA does not have a retail arm, but concentrates on setting monetary policy in cohort with, but separate from, the Australian Federal government.

I write this post, having read about the banks re-opening in Greece, but with controls on capital still in place.

The Four Pillars Policy commenced in about 1990, but has undergone a few changes over time. Essentially, it stops them merging with each other. It stops them growing big enough to be attractive to international takeover. Either of the four can still merge with smaller banking/insurance institutions. This policy is given some of the credit for the Australian economy surviving the GFC so well.


William Kendall said...

We've got five major banks, and a handful of smaller banks, as well as credit unions. A previous government, not the current one, kept regulations in place to prevent mergers, which probably helped us through the 2008 crash.

Julie said...

Yes, Australia and Canada were in remarkably similar situations throughout the GFC. And then we each voted in right-wing ideologues immediately we were spared, and they claimed that the GFC did not occur!! Citizens often get it wrong.

Joe said...

If the four pillars softened the blow of the GFC I am pleased. It's impact was felt loud and clear.

Joan Elizabeth said...

My hubby would beg to differ. According to him it has weakened Australia's capital sector. He says the four pillar policy is government intervention in the market and keeping them small and weak. Weak like the Greek banks. And the main arguments for the 4 pillar policy have failed eg it was meant to keep mid sized banks operating for the small business sector but the big banks have taken them over. They have kept their names but are owned by the 4.