83 Million Reasons For A Banking Royal Commission
  • 20 April 2016

83 Million Reasons For A Banking Royal Commission

MEDIA RELEASE

APRIL 20, 2016

A lack of competition in the Australian banking industry is allowing the four big banks to fleece more than $83 million in profits every day from their mum and dad customers according to Kevin Young, Property Club president, Australia’s largest independent property group.

Mr Young said that last financial year, the big four Australian banks had a combined net profit of $30.3 billion, making them the most profitable in the developed world.

“Every year the big four banks report record profits for the benefit of their shareholders due to their stranglehold on the lending market in Australia,” he said.

“Property Club welcomes the establishment of a Royal Commission into the banking and finance sector but believes that the terms of reference should be wider than proposed by the Labor Party to include competition in the banking sector and the operation of the RBA.

“We have been calling for a Royal Commission into the big banks for several years because of this lack of competition and accountability in the banking sector has allowed the big banks serve the interests of their shareholders through rewarding them with massive profits while ripping off mortgage holders with their worldwide high interest rates.

BIG FOUR BANK PROFITS (2015)

  • Commonwealth $9.1 billion
  • Westpac $7.8 billion
  • ANZ $7.2 billion
  • NAB $6.3 billion

“The Reserve Bank (RBA) has failed to force the big four banks to offer more competitive interest rates and has presided over interest rates in Australia which are now much higher than the USA and the UK, for example, even though their relative economies are now stronger than ours.

“Through its high interest rate policy and ‘turning a blind eye’ to the big banks who have increased interest rates well above its own interest rate settings, the RBA has made these banks the most profitable in world.

“This was recently underlined by the world’s central bank, the Bank for International Settlements (BIS), the pre-tax profits of Australia's big four was the equivalent of 1.28 per cent of their total assets.

"Australians have every right to demand greater accountability from the Reserve Bank when you consider that its head is paid over $1 million a year which is around three times the annual salary of the head of the Federal Reserve in the USA.

“We believe that the RBA should be brought under the control of Treasury so this key organization in the economy is more accountable.

"This is why The Property Club has been calling for a Royal Commission into the operations of the RBA as well as the big for banks.

“We should not miss this opportunity to undertake a thorough review of competition in the banking sector through a Royal Commission with terms of reference that are too restrictive.

“Since 1902, there have been more than 100 Royal Commissions and Commissions of Inquiry established by the Federal Government. These Inquiries have examined a range of industries over the last century such as sugar, tobacco, insurance, construction, oil, shipping, butter, fruit and pearl-shelling to name a few," he said.

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