Australia’s big banks have been hit with a bank levy in today’s Federal Budget that will raise $6.2 billion over four years.
The levy will apply to banks that hold $100 billion in liabilities and currently that means it applies to Commonwealth, Westpac, ANZ, NAB and Macquarie.
The levy will increase the competitiveness of smaller banks who won’t be subject to the new charge and will be more competitive if the big banks try to recoup the levy through their customers.
The Budget also includes provisions for the Australian Competition and Consumer Commission (ACCC) to undertake detailed inquiries into the financial sector and pricing.
In some good news for the majors, the Budget will give the Australian Prudential Regulation Authority (APRA) $2.6 million to keep an eye on non-bank lenders who up to this point haven’t had the same regulatory scrutiny applied to them as the big banks have, levelling the playing field somewhat.
The package on the big banks in the Budget is summarised below:
1. Major bank levy of six basis points on banks with liabilities above $100 billion.
2. A new regime giving APRA the ability to remove and disqualify an executive, adjust bank pay policies and impose penalties for misconduct.
3. Senior bank executives will be required to register with APRA and banks will be required to advise APRA prior to making a senior appointment.
4. Creation of the Australian Financial Complaints Authority for consumer complaints.
5. ‘At risk’ pay will have to be deferred for at least four years.
6. New rules on providing credit cards.
