ACTU: Banks Show Narrow Self Interest

07 February, 2012 | ACTU Media Release

Australia’s big four banks cannot justify refusing to pass on in full any cut to official interest rates by the Reserve Bank today given they last year reported a combined profit of $25.2 billion.

ACTU President Ged Kearney said the combined salaries of the four major banks’ CEOs totaled $28.6 million. This, along with the massive profits makes it impossible to feel any sympathy for their complaints about their financial circumstances.

“At the same time, the big four banks last year slashed 3300 jobs and already in the first month of this year, Westpac and ANZ have announced plans to shed another 730 jobs between them,” Ms Kearney said.

“If the big banks are desperately in need of tightening their belts, a good place to start would be with their CEO’s salaries. They earn in a year what most Australians take a lifetime to generate, yet it is interest paid on mortgages taken out by workers that allow their profits to grow.

“Those workers include their own staff, whose jobs they so readily cut in pursuit of their addiction to continual profit growth.

“Last year, the big four banks made profits of $25.2 billion – easily more than the rest of the banking sector combined - and they now have a greater share of the home lending market than before the Global Financial Crisis.

“They have squeezed competition out of the market, and are now using their market power to squeeze working Australians.

“It is crocodile tears for the big banks to be crying poor and even to be contemplating refusing to pass on an interest rate cut at the same time as they are hurting so many workers’ livelihoods. Should they carry out this threat, they deserve to feel the full weight of a community backlash.

“If the banks cannot behave in a socially responsible manner, it may be time to consider stronger government regulation to drive greater competition, improved consumer protections and more sustainable corporate behaviour in the banking sector.

“Banks should be required to reflect the interest rate movements set by the Reserve Bank and to fully justify any variation. They should also be required to demonstrate a direct link between their fees and charges. Banking is an essential service and the interests of consumers are not being properly protected.

“Banks have a central responsibility in maintaining Australia’s economy that goes beyond their narrow self-interest.”