Aussie Home Loans boss John Symond does not expect consumers will be hurt by a possible merger between banking rivals St George and Westpac.

Shares in both banks were suspended this morning to allow merger talks to continue.

The negotiations could result in a $64 billion banking entity, bigger than either the Commonwealth Bank of Australia Ltd or National Australia Bank Ltd.

Westpac - Australia’s third largest bank - said it approached St George - the number five bank - on Friday.

“I think it should not impact consumers at all,” Mr Symond told Fairfax Radio Network.

“I think that St George has a better consumer culture than Westpac and the mere fact of having four big banks instead of five, I don’t think it is going to mean a lot.”

Competition in the Australian banking sector had already taken a “huge nose dive” during the past nine months on account of the global liquidity crunch.

Aussie Home Loans - in partnership with Macquarie Bank - opened up the Australian securitisation credit market in 1994 resulting in greater competition between traditional banks and non-bank home lenders.

“What people have to remember is that interest rates were driven down on home loans by about three per cent - all that competition came from outside the banking sector,” Mr Symond said.

“Right now the credit markets are shut down. Hopefully, they will open in the next 12 months.

“But during this period it has given the big retail banks in this country a huge advantage.”

AAP