Little sign of better banking

Press, 28 July 1987, Page 28

Little sign of better banking

By

NICK BROWN

NZPA Sydney The benefits of increased Australian banking competition since the Government granted licences to 16 foreign banks two years ago have gone unnoticed by many retail banking customers because of the coinciding l downturn in the economy. , When Treasurer Paul Keating opened the gates to the foreign banks, he; said it would “lift competition and provide the Australian public with banking services equal to the best in the world.” Since then, however, Australia has gone! through a currency crisis which prompted Mr Keating to make his historic 5 “banana republic” remark in a rising interest rates climate. Foreign banks have so far not made the market inroads that they expected. Official figures released recently showed that only 5.1 per cent of Australian banking assets were foreign-owned by June, 1986. Banking industry sources admit that macroeconomic factors have largely masked the benefits of the foreign banks’ entry into the market, but they still-claimed the Australian public was enjoying better banking services because of the increased competition. “‘Certainly in the corporate area there has been very keen competi-

tion and most of the newer banks have tended to concentrate on that,” a spokesman for the Australian Bankers’ Association said. “Nevertheless there are still some areas where competition is very keen for the personal customer and even if they may not have won much business, the fact remains that there have been changes in approach in relation to cheque accounts." Increased efficiency in the corporate banking sector would also flow through to benefit the whole economy. But the spokesman admitted that retail customers would find it hard to detect any improvement in bank interest rates as a result of the competition. Most of the 16 foreign banks who gained new Australian licences, including New Zealand’s National ■. Bank, have concentrated on ’ the corporate market. But two Australian-Ameri-can banking joint ventures have made major thrusts Into the retail sector. National Mutual Royal Bank (a partnership between the Royal Bank of Canada and National Mutual) has a big high street presence after National Mutual took over the branches of the United Permanent Building Society. And Chase-AMP Bank (a partnership between Chase Manhattan and AMP Society) pushed for a big share of the plastic card market by offering 2 or 3 per cent below the market rate for credit cards.