Big bank deposit stranglehold hurts regionals
The big four banks hold 72.6 per cent (including St George and Bankwest) of all retail deposits in Australia in August 2009, compared with 58.8 per cent when the Global Financial Crisis began in August 2007. “Retail deposits are the lifeblood of the Tier 2 Australian banks, as these funds are then used as a funding tool for the lending books”, said Andrew Inwood, CoreData-brandmanagement principal. “As Australians continue to deposit with the big four, Tier 2 Australian banks, foreign banks and some major mutuals are starved of cash, and have to find other, often more expensive sources of funding such as the wholesale funding markets. “This prevents these smaller banks and mutuals from being able to compete on price, which makes the big banks more competitive. Australians therefore are having an impact on reducing their own banking options”.