Big Four squeezing non-banks into mergers
WHEN the Bank of Queensland appointed corporate advisers in December to review acquisitions, strategic partnerships, mergers and possible takeover offers, it sent a clear message that any rival outside the Big Four banks needed a new set of tricks to compete.
Bank of Queensland chief executive David Liddy told shareholders: "To compete with the big banks, smaller banks such as BoQ, as well as credit unions and building societies, have been merging and will continue to do so."
Two weeks later, on December 24, Wizard Home Loans was sold to Commonwealth Bank and Aussie Home Loans for $26million. The remaining non-bank lenders, Resi Mortgage Corp, First Mac, Pepper Home Loans, Better Choice Home Loans, Beat Home Loans and a few others are expected to either close down or merge as credit conditions worsen.
In the regional banking sector, Suncorp and Bendigo Bank are tipped as takeover targets as the dislocation in capital markets, falling asset prices and pressure to re-capitalise make it increasingly difficult to compete with the bigger banks.
On the mutual side, more credit unions and building societies are considering merging to compete with the bigger players, at a time when falling interest rates are crunching their margins and more rigorous regulation is pushing up their costs.
There are 130 credit unions and building societies in Australia, representing $65billion worth of assets, 3.4million members, and 6 per cent of the home loan market.
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