Australia’s ‘Big Four’ banks have further increased their dominant market share in business banking in the last five years, according to research from East & Partners.
The research and analysis firm says that the four – National Australia Bank (NAB); Commonwealth Bank (CBA); Westpac; and Australia and New Zealand Banking Group (ANZ) – have lifted their collective market share as primary lender and primary transaction bank to Australian businesses to over 80% in the past five years.
It adds that the findings present challenges to the financial services inquiry (FSI) chaired by former CBA chief executive (CEO) David Murray, which last month produced its interim report, as it seeks to balance financial stability with competition.
Murray, whose inquiry was commissioned by the Australian government has the “unenviable task of levelling the Australian banking playing field while maintaining capital market stability,” comments East. Issues include how changes can be conducted without detracting from recent Big Four success, which areas of the banking industry are susceptible and where the most lucrative opportunities exist.
East’s research, which looked at businesses turning over A$725m (US$672m; £400m) shows that the Australian Big Four’s market share as primary lender increased from 69.6% in 2008 to 82.9% in 2014. In transaction banking, the Big Four share jumped from 79.8% to 84.5% in the same period.
For businesses turning over A$20- A$725m, the Big Four’s share as primary lender increased from 74.2% to 82.5%, while transaction banking share expanded from 73.6% to 82.2% over five years.
East reports that one sign of renewed competition, however, comes from a resurgence of syndicate lending. Syndicate lending is on the comeback in institutional credit markets, with the FSI set to prompt greater market share gains in 2015.
Trending data since 2008 reveals institutional lending growth has been experienced by all but one of the Big Four banks, yet the resurgence of syndicate lending as a viable alternative for the Top 500 enterprises by turnover is a telling indicator of what the banks can expect to come.
Primary syndicate lending market share decreased from 8.6% to 6.1% between 2008 and 2012 before jumping back to 7.7% in 2014. Secondary syndicate market share tracked an even more significant rebound, falling from 12.8% to 6.9% before climbing to a current 10.5% of secondary lending relationships.
The firm’s report notes that “following the global financial crisis (GFC) many of Australia’s largest enterprises returned to their primary banking relationship, reflected in decreased customer churn.
“The FSI’s stated focus on stability has been positively received by chief financial officers (CFOs) and treasurers and with interest rates remaining low, the barriers to customer churn are falling all the time
“The hunt for yield will continue to drive syndicate lending growth in Australia, providing even greater competition for the Big Four let alone regional and non-bank lenders”
The proposals of both US presidential candidates could shake up operating conditions in several sectors, reports the credit ratings agency.
The Danish shipping and oil conglomerate confirmed that it will separate its businesses into stand-alone transport and energy divisions.
The central bank has tweaked its stimulus programme and is making a fresh effort to push Japan’s inflation rate above its 2% target.
Despite faster payment technologies, business-to-business payments by paper cheque show no sign of decline from three years ago.