Chalmers seeks to boost small banks with mortgage review

Already a subscriber?Treasurer Jim Chalmers will seek to boost the power of smaller regional banks as they struggle to compete against the big banks in mortgage lending through a regulatory review that will focus on the higher funding costs of small and medium lenders.

The proposed deal has been dragging on for two years. It was announced in June 2022, rejected by the Australian Competition and Consumer Commission in August 2023, and approved on appeal by the Australian Competition Tribunal in March. “Completion of the acquisition remains subject to the commencement of the act and approval by the federal treasurer,” it said.Meanwhile, the Council of Financial Regulators and the ACCC will review challenges faced by small and medium banks following findings by an“The review will focus on the role small- and medium-sized banks play in providing competition in the sector and the regulatory and market trends affecting them,” Dr Chalmers said.

The government has not taken up a suggestion from Dr Mulino’s report for borrowers to be offered home loans that track movements in the Reserve Bank of Australia’s cash rate.

The net interest margins of the big banks combined declined to 1.79 per cent in the first half of 2024, compared with 1.89 per cent in the second half of 2023.The financial regulators will examine options to lower the cost of wholesale funding for small and medium banks to compete against ANZ, Commonwealth Bank, National Australia Bank and Westpac.

Source: Financial Digest (financialdigest.net)

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