Bulletin 10 – Action needed to promote competition in banking

Confirmation from the RBA that major banks have fattened their margins above pre-crisis levels increases the need for more Government action to promote competition in retail banking.

“The major banks have too much market power,” says Abacus CEO Louise Petschler. “This is why, as the RBA has confirmed, increases in lending rates by the major banks have more than fully offset higher funding costs, with their net interest margins in late 2009 about 20-25 basis points above pre-crisis levels. 

“In stark contrast, net interest margins for mutual banking institutions (credit unions and building societies) and for regional banks have shrunk from pre-crisis levels.

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