FED: Aust farmers, consumers welcome Canadian bank decision

AAP General News (Australia)
12-15-1998
FED: Aust farmers, consumers welcome Canadian bank decision

CANBERRA, Dec 15 AAP - Australias peak farming and consumer groups today urged the federal
government to take heed of Canadas rejection of a proposed bank merger to create two
mega-banks.

Canadas finance minister has rejected a proposal for four of the country's biggest banks
to merge into two mega-banks, controlling 70 per cent of Canadian banking assets.

The National Farmers Federation (NFF) said the decision reflected the same concerns held
in Australia about big bank mergers, particularly reduced competition and services.

NFF economics committee chairman Brendan Stewart said polls found Canadians believed bank
executives, not customers, stood to gain from the mergers.

And small businesses were concerned the move would lead to job cuts, reduced services in
small towns and fewer options for competitive loans, he said.

"This is a clear lesson to Australia that the benefits of bank mergers have been oversold
by Australian banks," he said in a statement.

"It would be folly for Australia to consider permitting any move that would reduce the
number of major banks to less than four at this time."

Mr Stewart said 600 communities in rural and regional Australia had no access to a
financial institution.

The Financial Services Consumer Policy Centre agreed, saying the decisions should help
Australia reaffirm its commitment to the four pillars, anti-bank merger policy.

The policy prevents mergers between the four major banks - the ANZ, the National Australia
Bank, Westpac and the Commonwealth Bank.

"This decision, even though it has been made on the other side of the world, is good news
for Australian consumers," director Chris Connolly said.

"The lesson for the Australian government is that they must remain strong in the face of
industry pressure."

The Australian Consumers Association also welcomed Canadas decision, which it said
followed 11 months of analysis.

"Over the last year, every aspect of these mergers has been scrutinised," ACA policy
manager Mara Bun said.

"Todays decision provides us with some very valuable lessons in why major banks should not
be allowed to merge and supports our governments commitment to the four pillars policy as the
only viable option."

She said that as part of the merger negotiations the four banks promised no job cuts, lower
fees and increased access to banking services.

"Time and again, the Canadian investigative process has found that mergers could not
deliver any benefits to consumers and in fact would lead to higher costs, declining services
and reduced choice," she said.

"Not only that, the economic arguments of the bank also fell through.

"Australia has much to learn from Canadas arduous and cautious consideration of efficiency
and equity arguments."

AAP ear/mfh/kr/br

KEYWORD: BANKS CANADA AUST

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