Competition within the Australian banking sector

Competition within the Australian banking sector

6 May 2011

© Commonwealth of Australia 2011
ISBN 978-1-74229-275-5

View the report as a single document - (PDF 2704KB)

View the report as separate downloadable parts:

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Membership of Committee (PDF 8KB)
Acronyms (PDF 4KB)
Summary and recommendations (PDF 42KB)

The global financial crisis: stability and competition
Banks' home loan interest rates
Profitability and concentration in the banking industry
Reducing barriers to customers moving between financial intermediaries
Promoting more competitors
The securitisation market
Price signalling
Supervision of the financial system
Government guarantees for the financial system
Taxation and related measures
Small business finance

Chapter 1 - Introduction (PDF 13KB)

Referral of the Inquiry
Conduct of the inquiry
Outline of the report

Chapter 2 - Background - the Australian banking market (PDF 41KB)

Australia has strong banks
A short history of Australian banking competition
The impact of the global financial crisis

Chapter 3 - Past reviews and calls for a new review (PDF 74KB)

Early reviews of banking competition
The 1937 Royal Commission
Campbell Committee
Vic Martin Review Group
Stephen Martin Committee
Wallis Committee
Recent parliamentary inquiries
Calls for future banking inquiries

Chapter 4 - Assessing competition in the Australian banking market (PDF 391KB)

Number of products available and competitors
Intensity of competition
Measures of concentration in the Australian banking market
The profitability of banks in Australia
Measures of return on equity
Interest margins
Interest spreads
Bank fees
Barriers to entry
Perceptions of competition
Overview of competition
Multi-brand banking
Banking competition in regional areas
Committee view

Chapter 5 - Home loan interest rates (PDF 286KB)

Banks' cost of funds
Loan rates and the cost of funds
The repricing of risk
Measuring home loan interest rates
International comparison
Tying home loan interest rates to the Reserve Bank's policy rate
Committee view

Chapter 6 - Small business finance (PDF 115KB)

Availability of credit to small business
The cost of credit for small business
Loan guarantees for small business
Banks' service to small business customers
Bank mergers and small business lending
Better information about the sector

Chapter 7 - Moving between banks (PDF 751KB)

Mortgage exit fees
Other factors influencing inhibiting customers moving between mortgage providers
Deposit account number portability

Chapter 8 (PDF 112KB)

What is price signalling?
Why is price signalling a problem?
The current law: a contract, arrangement or understanding
The proposals for reform
Committee view

Chapter 9 (PDF 88KB)

Merger policies generally
Mergers among banks
Four pillars
Encouraging new entrants
Mutuals as a 'fifth pillar'
Proposals for a new government bank
Committee view

Chapter 10 (PDF 34KB)

Competition and unfair contract terms
Mortgage early exit fees and unfair contract terms
Unfair fees
Bank selling practices
Committee view

Chapter 11 - The prudential supervision of financial intermediaries and their social obligations (PDF 115KB)

Competition and stability
Are the major banks 'too big to fail'?
Capital requirements presently
Other current prudential requirements
The new Basel III capital and liquidity requirements
Banking 'licences'
Mutual ADIs and banks
Other financial institutions
Bank holding companies and the 'narrow banking' model
Social obligations of banks

Chapter 12 - Government guarantees and support (PDF 110KB)

Government guarantees for bank funding
Permanent deposit insurance or guarantee scheme
Other government support for competitors to the major banks

Chapter 13 - Bonds: a key funding source (PDF 231KB)

The Australian Office of Financial Management programme
Other proposals for government support of securitisation
Covered bonds
Fixed interest markets more generally
Tapping superannuation

Chapter 14 - Competition in the payments system (PDF 174KB)

ATM fees and access
Competition in credit card markets
Other aspects of the payments system

Chapter 15 (PDF 65KB)

Interest withholding tax
Tax concessions on deposit interest income
GST input taxing
Franking credits
Retirement Savings Accounts
First Home Saver Accounts
Increasing taxation on banking

Bibliography (PDF 14KB)
Government Senators’ Minority Report (PDF 53KB)

Exit Fees
Price Signalling
Funding Sources
Customer Information
Financial System Inquiry
Action Taken
Exit fees
Price Signalling
Support for bullet bond markets
Covered Bonds
Bank fees fact sheet
Other Bank Competition Issues
Financial System Inquiry
Other Recommendations

Additional comments Senator John Williams (PDF 9KB)
Additional Comments by Senator Xenophon (PDF 28KB)

Bank profits up, but so are interest rates
The need for a ‘fifth pillar’
‘At Treasury, we won't save you’

Appendix 1 - Submissions Received (PDF 18KB)
Appendix 2 - Public Hearings and Witnesses (PDF 14KB)

For further information, contact:

Department of the Senate
PO Box 6100
Parliament House
Canberra ACT 2600

Phone: +61 2 6277 3540
Fax: +61 2 6277 5719