The proposed Westpac takeover of St George Bank will hurt small business, warns the former Australian Competition and Consumer Commission chairman Allan Fels.
And the proposed takeover will draw scrutiny from the ACCC, as concerns over diversity of lending mount, he says.
Fels believes the effects on banking competition from the tie-up are significant, particularly for small business and consumers.
St George is the last big independent bank left, he says.
He says St George is much more customer friendly, has a different style and adds diversity to the market so its removal raises serious competition questions.
Fels says the recent credit crunch had removed some of the diversity of lending supply as third-party financiers have struggled to raise wholesale funds. The tightening of supply has meant small businesses are again becoming over-reliant on the big four banks – ANZ, NAB, Commonwealth and Westpac – raising further complications for the competition regulator.
“With regard to the small business choice, all they’ll have are the big four that would be left after this and not much more,” Fels says.
He also raised concerns over the possibility of the big banks to co-operate implicitly on interest rates.
A Westpac statement today said that the joint entity would “provide greater diversity and choice of products from both organisations.”
When asked about the likelihood of regulatory approval from the ACCC for the Westpac takeover of St George Bank, Fels told SmartCompany: “I wouldn’t like to call it at this stage.”
This morning Westpac officially offered St George Bank 1.31 Westpac shares for each St George share in a proposed merger that would create Australia’s largest bank.
As of 12:45pm today St George shares were trading at $33.32, up $6.67, while Westpac was trading at $25.17, down $0.80. Both stocks were in a trading halt yesterday.