NEW SOUTH WALES SMALL BUSINESS MINISTER AND FINANCIAL SERVICES CONSUMER POLICY CENTRE NEGLECT DATA SHOWING THE BENEFITS OF COMPETITION IN SMALL BUSINESS BANKING Sydney, 9 April, 2002: The Australian Bankers’ Association (ABA) says today’s media releases from the New South Wales Minister for Small Business, Sandra Nori, and Financial Services Consumer Policy Centre (FSCPC) have neglected how small businesses have benefited from competition in the financial services sector. Claims by FSCPC and the NSW Small Business Minister that small businesses have been disadvantaged by fee increases needs to be seen in the context of: the fall in interest rate margins has more than offset any increase in fees; the reduction in fees on loan products has offset increases in fees for deposit products. David Bell, Chief Executive of the ABA, said: “The savings on interest repayments are significant. The interest rate margin savings on a $100,000 overdraft written in 2000 compared to 1997 are $1,400. Combined with savings of $220 in bank fees on the same overdraft (2000 compared to 1997), the small business would be ahead $1,620.” The Small Business Banking Issues Paper released today by FSCPC is also deficient in a number of other respects, including: It erroneously criticises KPMG’s analysis in its recent report (“Small Business Banking in Australia – February 2002) by confusing interest margins and the decline of fees on loan products compared to deposit products; It misleadingly claims that interest on small business deposit and transaction accounts has ‘virtually disappeared’ (see Table provided by Cannex); It fails to acknowledge the huge range of deposit products provided by banks offering interest and various other convenient product features; It fails to acknowledge that Australia is a low cost environment for small business banking services internationally – including the United Kingdom; It fails to acknowledge that many banks are extending the number and spread of local facilities through Australia Post’s GiroPost, piloting business banking in 200 locations in 2002. Background for editors on the competitive small business banking market: In the past five years, regional banks have doubled their share of deposits to an estimated 12% and seen a 20% increase in their share of debt to 11%. The ABA welcomes the further competition provided today by the national launch of BankWest’s FreeBTM banking service. The KPMG Consulting report  - “Small Business Banking in Australia.” commissioned by the ABA, found that: 57 institutions supplying 720 debt products often tailored for the sector; 44 institutions supplying 72 small business transaction accounts; electronic banking -  Internet use by small business has doubled since 1998 and up to 80% of them use it for some form of banking; innovative product creation from individual banks and other financial service providers. Copies of the KPMG Consulting Report - “Small Business Banking in Australia” can be downloaded from the ABA website www.bankers.asn.au See following table for some examples of interest bearing accounts offered to business by banks – provided by Cannex. For further information contact: Heather Wellard ABA  PR Phone : 02 8298 0411 Mobile : 0409 830 439 ENDS