Australia’s Bruised Big Banks Offered Respite In Inquiry Wash-Up | 10/25/2017 | Staff
SYDNEY (Reuters) – After a year of bruising interrogation, Australia’s oligopoly banking system has emerged from a government-appointed inquiry with reputations tarnished and some top executives removed – but also an unexpected opportunity to rebuild.

Proposed reforms to the mortgage broking industry revealed on Monday will potentially put billions of dollars of broker-originated loans in play in the banks’ most important profit-generating sector.

Australia - Banks - Australia - New - Zealand

Australia’s “Big Four” banks – Australia and New Zealand Banking Group, Commonwealth Bank of Australia, National Australia Bank and Westpac Banking Corp – now have the opportunity to battle for the money projected to leak from the mortgage broking sector and capture extra margins by cutting out an intermediary.

Stockbroker Bell Potter has priced in an anticipated 15 percent reduction in loans moving through brokers, on the basis that customers will balk at the proposed changes, where the borrower – not the lender – would pay a fee to the mortgage broker.

Customer - Base - Mortgage - Books - Banks

“With their huge customer base and mortgage books, the large incumbent banks are very well positioned to benefit from a post-Royal Commission world where they can win (market share),” said one bank official, who was not authorized to speak to the media.

“Banks could also open branches in strategic high-growth areas to capture more customers.”

Time - Bank - Shares - Wash-up - Inquiry

At the same time as bank shares surged in the wash-up of the inquiry’s final report on Feb 4, listed mortgage brokers were left nursing huge losses.

Finance Brokers Association of Australia managing director Peter White said the big banks would use their branches to take the lion’s share, at a cost to consumers.

Everything - Banks - White

“All that happens through this is that everything just gets pushed back to the four major banks,” said White.

The proposed broking changes still need to go before parliament, and a general election expected in May could determine which reforms are implemented.


The powerful inquiry, called...
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