ACCC Effect on Mortgage Market Share
The ACCC appears to have overestimated the strength of Australian mortgage competition when announcing last year that it would not oppose the Westpac / St George and Commonwealth Bank / Bankwest mergers.
The ACCC’s Public Competition Assessment in August 2008 calculated the merged Westpac / St George entity would at that point have had a mortgage market share of 21%. At the end of September 2009 the combined Westpac / St George entity has 23.4% mortgage market share, according to the forthcoming CoreData-brandmanagement Australian Mortgage Report.
In forming its view last year the ACCC noted a number of regional banks were expanding their presence in other states, citing Bankwest, Bank of Queensland, Suncorp and Bendigo Bank.
As the Global Financial Crisis brought the global financial markets to its knees in late 2008, the ACCC by its own admission had little choice announcing in a Public Competition Assessment in December 2008 not to oppose the Commonwealth Bank takeover of Bankwest, citing the merged entity would have a mortgage market share of 21.6%.
By September 2009 the Commonwealth / Bankwest group had grown market share to 25.5%.
Westpac and Commonwealth Bank combined hold 48.9% of all mortgages in Australia as at September 2009, up from a combined 42.6% when the mergers were approved.
Two Banks Will Control 50% of Mortgages
“The ‘big two’ will soon control more than half of all outstanding Australian mortgages by value, as market share continues to accelerate reaching 48.9% in September 2009, compared with 45% at the start of 2009″, said Tony Crossley, CoreData-brandmanagement head of mortgages and insurance.
“Of the other two big four banks, National Australia Bank is addressing its poor mortgage market acquisition strategy though the purchase of Challengers broker channel, with ANZ more focused on Asian than local growth.
“Regional banks have significant challengers in competing on either brand or price and are therefore providing no barrier to the ‘big two’ banks continued mortgage market share gain”.
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Broker in the 'burbs November 3, 2009
And this is a surprise outcome to anyone?
What it does highlight though, is the ACCC’s impotence and irrelevance.
Sure, they (the ACCC) might be able to smack a small target or two (like Wayne Ormond) around now & again, but when it comes to the industry heavyweights, the ACCC are simply moribund.
It also seems that the natural progression of competition in this country, eventually results in just two large players and the rest picking up the scraps.
Whether the industry is petrol, retail, grocery, banking etc, these oligarchs are simply modern day lords of the realm with the general public having to accept price gouging and inflated pricing as a rule.
And the bureaucrats simply dither around with insignificant targets, to make themselves seem relevant. Pathetic.
Blind Freddy would have seen what would happen post Bankwest & St George. Even the yanks (with their anti trust laws) hammered Microsoft when they hauled them up for bundling its flagship Internet Explorer web browser software with its Microsoft Windows operating system.
Bit like a Big 2 bank, owning the product, owning the aggregation company & controlling distribution. A bit like a monopoly, don’t you think. I’ll concede it’s not quite the same….but if it walks like a duck….!!