Business lending plunges

The big four banks have tightened their grip on the Australian market – and new lending to business has plunged.

Figures released by the Australian Bureau of Statistics today show that commercial lending in Australia has been on a steep downward trend since February this year.

There have been persistent reports, over that time, that the banks raising their standards, for new business lending.,

The situation worsened in October, when commercial lending plunged bh 16.3 per cent, on a seasonally adjusted basis.

The banks lent the nation’s businesses less than $26 billion that month.

Home lending also fell by 1.7 per cent during the month on seasonally adjusted figures, while personal finance fell by 1.5 per cent.

Even lease finance was relatively flat during the month, rising by just 0.5 per cent.

However personal finance lending has been rising strongly, in trend terms, since June.

But David Liddy, chief executive of the Bank of Queensland, says Australia’s banking system has moved closer to a “retail style oligopoly” in the wake of the global financial crisis.

Mr Liddy said the higher levels of competition, which had built up over the 15 years before the crash, has now “basically gone.”

“The majors are writing 95 to 98 per cent of all new mortgages,” he said.

“So we have an issue in terms of consumer choice.”

The Prime Minister, Kevin Rudd and the Treasurer, Wayne Swan, have both attacked one of Australia’s biggest banks, Westpac, sharply,over the past fortnight,  because it  increased its mortgage interest rates this month by more than the latest rise in the Reserve Bank’s target rate.