RBA chief exposes big bank bastardry

Some of the now confessed bastardry of Australian banks has now been exposed, at the highest possible level.

The Reserve Bank Governor, Glenn Stevens, chose his words carefully – and spoke politely – when he did that late yesterday.

But those who heard him had no doubts about what he was really saying.

He was laying into Australia’s big four banks.

The Governor’s speech, clearly, followed years of frustration, dealing with the deep conservatism and self-serving policies, of Australia’s big four banks.

True, they haven’t acted as badly  as their reckless counterparts in the United States, who played a major role in precipitating the present global economic crisis, through their reckless lending and subsequent complex cover-ups.

But Mr Stevens’ catalogue of what they have done – and failed to do – makes serious reading, anyway.

The governor says, for example, that the big four banks have effectively lumbered Australian shoppers and businesses with a cumbersome payment system, whose design is at least thirty years out of date.

He said other countries, including Britain, Canada and the United States have done much better, at keeping up with both changing – and rapidly advancing – technologies.

Bad as that, undoubtedly is, Mr Stevens’ criticism of the big banks, which he regulates, didn’t stop there.

He noted too, that if the big four banks ever saw a chance to freeze small rivals out of the system, they would take it, regardless of the damage it did to competition in Australia’s financial system.

But Mr Stevens made it clear, too, that he also had his reservations about the smaller players, in Australia’s financial system.

“For example, small institutions would only consider a system that allowed to form fee-free networks among themselves, otherwise they would be at a competitive disadvantage to the big banks, with their large ATM networks,” Mr Stevens said.

He effectively confirmed, too, that the Reserve Bank had been forced to drag the big four, kicking and screaming, into the recent reform of Australia’s ATM system.

The new  head of the National Australia Bank, Cameron Clyne, boasted yesterday, that as boy who grew up in Sydney’s western suburb of  Penrith,  he was pretty used to “people telling it like it is.”

And he added: “There are issues where many people think the banks can be bastards”.

Mr Clyne might well have hesitated, before saying that, though, if  he had realised that Mr Stevens would soon, effectively, join those critics.

That happened just a few hours after Mr Clyne spoke.