The Productivity Commission has received a joint submission from six regional banks which have called for regulatory reforms to ensure that they remain competitive against larger rivals. Amongst other things, they have argued that the Federal Government’s implicit guarantee to bail out the “big four” in the event of a financial crisis gives them a competitive advantage when seeking funding via wholesale debt markets. The regional banks have also called for changes to the policy that requires them to have higher levels of capital for loans that have an equivalent risk. From The AFR:
Bank of Queensland, Bendigo and Adelaide Bank, AMP, Suncorp, ME and MyState have… [argued] policies that would help to even the playing field for the regional banks include reducing the advantage that accrues to the big four banks from an implicit guarantee of government support in a crisis, which allows them to raise cheaper wholesale debt.
