Four pillars policy

Source: Wikipedia, the free encyclopedia.

The four pillars policy is an

merger or acquisition between the four major banks.[1] The policy, rather than formal regulation, first articulated in 1990, reflects the competitive concerns of more concentration as well as the broad political unpopularity of further bank mergers. A number of economically liberalist commentators have argued that the "four pillars" policy is built upon economic fallacies and works against Australia's better interests.[2]

The top four banking groups in Australia ranked by market capitalisation at share prices at 5 June 2021:

Rank Company Market capitalisation
(2021)		 Cash earnings
(2021)		 Total assets
(2021)
1 Commonwealth Bank $179.56 billion[3] $3.89 billion[4] $960.751 billion[5]
2 Westpac $97.22 billion[3] $3.44 billion[6] $901.329 billion[5]
3 National Australia Bank $89.46 billion[3] $1.65 billion[7] $766.063 billion[5]
4
Australia & New Zealand Banking Group
 $81.87 billion[3] $2.99 billion[8] $642.298 billion[8]

By market capitalisation, the Commonwealth Bank and Westpac are usually the two biggest companies on the

ASX200.[9]

History

In 1990, the then

National Mutual) — that further mergers of these institutions would be rejected. It was articulated in the context of a proposed merger between ANZ and National Mutual. Keating believed this arrangement would ensure a competitive banking market.[10]

In 1997, leading business figure Stan Wallis

AXA), but the ban on mergers of the remaining four banks was retained, with the rider that none of them were considered immune from foreign takeover.[13] With the change of government, new Treasurer Wayne Swan stated in 2008 that the Labor government has no plans to dismantle the four pillars policy.[13]

Legal and policy analysis

The four pillars policy has not prevented the four major banks from acquiring smaller competitors. For example, in 2000, the Commonwealth Bank acquired the

St George Bank in 2008.[13]

In 2017, Peter Costello said that the advantage of having big banks under the four pillars policy was stability, which he attributed to Australia faring well during the

GFC.[9]

Criticism

The policy has been criticised for being

financial crisis of 2007–08. The major banks have criticised the policy on the basis that limiting the size of Australian banks makes them less internationally competitive.[14]

See also

References

  1. ^ "RELEASE OF THE REPORT OF THE FINANCIAL SYSTEM INQUIRY AND INITIAL GOVERNMENT RESPONSE ON MERGERS POLICY" (Press release).
  2. ^ Marks, Bob; Young, Owen (22 August 2005). "Four pillars debate needs refining: AFR Economic Briefing". Archived from the original on 5 February 2008. Retrieved 24 January 2008.
  3. ^ a b c d "ASX Banks". Listcorp. Retrieved 5 June 2021.
  4. ^ "cba-1h21-asx-announcement" (PDF). www.commbank.com.au. Retrieved 5 June 2021.
  5. ^ a b c Monthly Authorised Deposit-taking Institution Statistics | APRA
  6. ^ "Westpac_FY21_financial_results" (PDF). www.westpac.com.au. Retrieved 5 June 2021.
  7. ^ "First Quarter Trading Update" (PDF). www.nab.com.au. Retrieved 5 June 2021.
  8. ^ a b "FY 21 Half Year Results Announcement" (PDF). www.anz.com. Retrieved 5 June 2021.
  9. ^ a b The Age, 26/07/2017, 'Are banker salaries really necessary?' - Peter Costello's challenge
  10. ^ "Four pillars back on agenda". The Age. 14 May 2008. Archived from the original on 18 May 2008. Retrieved 21 May 2008.
  11. ^ "Stan D. M. Wallis AC, BCom, Hon LLD, FCPA, FAIM, FCIM, FCIS". Amcor. Bloomberg. Retrieved 1 March 2018.[dead link]
  12. ^ Financial System Inquiry (1997). Final Report of the Financial System Inquiry. Canberra, Australia. Archived from the original on 9 July 2014. Retrieved 13 July 2014.{{cite book}}: CS1 maint: location missing publisher (link)
  13. ^ a b c "Westpac-St George merger won't topple four-pillars". The Age. 15 May 2008. Archived from the original on 15 May 2008. Retrieved 21 May 2008.
  14. ^ Durie, John; Gluyas, Richard (3 March 2009). "Four Pillars policy, our shield against crisis". The Australian.
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