Banks ‘safe from Asian takeover’

WESTPAC Banking Corporation’s boss David Morgan, who will step down from the post next month, says it’s unlikely a powerful Asian bank could seize one of Australia’s big four banks.

However, Dr Morgan said exposure to competition from foreign banks was good for Australian banks.

“As to the particular threat from Chinese and Indian banks, in terms of takeover, if they’re being rational about it, they’ll struggle to make sense of the sums,” he said.

“We are well-managed, efficient banks by global standards so I think the additional synergies that a Chinese or Indian bank could bring to a bank like us would be pretty low, frankly, and couldn’t repay a takeover premium.”

Dr Morgan’s comments contrast with remarks last month by rival ANZ Banking Group’s new chief Mike Smith who last month warned that emerging goliaths from China could acquire a stake in a local lender.

“I suspect that people are running the numbers,” Mr Smith said last month.

Dr Morgan said offshore banks’ attempts to pursue growth organically in Australia was good for competition in the domestic banking sector.

“Australian banks have met that challenge before and they’ll meet it going forward,” he said.

Under existing banking policy, a foreign bank can take over one of Australia’s major banks, although it would need federal approval.

However, under the “four pillars” policy Australia’s big lenders are forbidden to merge or take each other over.

The major banks have railed against the policy, which is supported by the new Labor Government, saying they need to bulk up if they want to compete domestically and internationally.

Dr Morgan said he was disappointed the new federal Labor Government had not seized the opportunity to revise it.