Posted by: Bruce | November 30, 2019

Australia’s Fab 4 Banking Oligopoly with a conflict of interest.

Banks. Do they have an image issue? Wonder how they are perceived by market mortals? Is public opinion of interest to them? Interest, a handy word.

CommBank and mirror - Edge image

Mirror, mirror on the wall, who’s the biggest bank of all?

Very recently, the Commonwealth Bank announced it was looking at charging higher interest rates to those who qualified for a loan through the Federal Gov’ts First Home Buyers Scheme. Eyebrows to the top.

The C’wealth Bank said that the likelihood of borrowers defaulting on their loan was higher, therefore it will consider raising interest rates to cover this risk. This is despite the fact that the loans are guaranteed by the Federal Government. The other big banks of course will go for the same hayride.

Some points of interest:

  • How’s that for logic? Make it financially harder for assisted first home buyers, young or not so young, and increase the likelihood of defaulting. Hmm. I wonder what profit is made reselling properties of mortgage defaulters?
  •  The fairly recent conclusion of the Royal Commission into our banking industry did not have our banks smelling of roses, more of an old egg aroma really.
  • Westpac Bank have just hit the headlines for breaking money laundering banking regulations, not once, but 23 million times. I’d be jailed for that.
  •  Banks love credit cards with annual fees and interest rates over 20%. Late paying ‘customers’ lets them cash in on penalties plus interest. Often, credit cards are held by those who can least afford them.
  • Many bank fees were cited as unfair and unjustified and refunds occurred.
  • Banks have to keep investors happy with good returns on their shares.
  • Banks often reject Gov’t policy and do their own thing regardless.
AusBankingOligopoly-image via thenewdaily.com

Australia’s banking oligopoly; CommBank, Westpac, ANZ, NAB.

This last bit about investors; Is the bank for the customers lined up at the grill or for those with money to invest in shares? Maybe most of the investors are also customers with loans, hoping to get a little bit of loan interest back via their shares. This structure of a bank (and other businesses), ‘juggling’ customers vs shareholders, strikes me as a conflict of interest.

I think we have a pretty strong banking industry though. Should have, thanks to paying customers.

oliver twist net image Edge

Oliver Twist with Commonwealth Bank jacket.

Banks, to me, are a bent version of Oliver Twist. “Please sir, I want some more”.

Eyebrows down.

https://www.abc.net.au/news/2019-10-27/government-unveils-details-of-first-home-buyers-scheme/11644018

https://thenewdaily.com.au/money/finance-news/2017/09/20/big-bank-oligopoly-slammed/

https://www.theguardian.com/australia-news/2018/aug/03/banking-industry-found-to-be-an-oligopoly-that-exploits-its-customers

Oligopolistic behaviour in the banks

https://www.businessinsider.com.au/first-home-buyer-scheme-interest-rates-bank-2019-11

Word for today;       Interest  – A banks lifeblood on tap.

More to come;      same blog time, same blog channel


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