RE-REGULATION COULD CRIPPLE AUSTRALIA'S HEALTHY BANKING INDUSTRY Sydney, 30 March, 2000:The Australian Bankers' Association says calls for re-regulation of the banking industry by the Financial Sector Union make no sense because competition and de-regulation have delivered the lowest interest rates in thirty years plus competitive, flexible products provided in a stable and secure environment for customers. Australian Bankers' Association Chief Executive Tony Aveling said: "The Finance Sector Union (FSU) is trying to shove the banking industry into a regulatory straitjacket, which means it could quickly end up in their ambulance being carted away to hospital." "We have the healthiest banking sector in the world and it makes no sense to try and cripple it with calls to return to the bad old days when there were high interest margins, limited product choice and poor access to banking facilities. " he said. "Today you can bank 24-hours a day at ATMs, through EFTPOS, telephone and internet banking, saving time and money. Not to mention having access to your cash at branches, community banks, in-store branches, through supermarket banking, the Post Office, agencies and branches." "A return to the past would mean the ultimate losers would be bank customers, who would pay higher fees, charges and interest margins, and shareholders, who would see their returns diminish. Branches The Financial Sector Union (FSU) figure of 2000 branch closures since June 1993 is incorrect. "Not only has the union made a mistake with its claim that 2000 branches have closed, the number is actually 1706, " said Mr Aveling. "But conveniently left out of their assessment is the substantial increase in face-to-face banking services provided through agencies and giroPost. In fact, there are an additional 1258 face-to-face services (branches, agencies and giroPost) provided by banks since 1993, " he said. Jobs On employment in the banking industry, the FSU is also presenting an incomplete picture. A major study of employment in the finance industry conducted by the FSU themselves found that the "unemployment rate in the finance sector is relatively low." "While jobs have been lost over recent years they have quickly been replaced. In fact, the Finance and Insurance sector has the lowest unemployment rate in the private sector. In other words, good people are quickly finding new jobs in a thriving industry, " said Mr Aveling. Banks, just like many other businesses, are changing the way they deliver their products because of the rapid advances in telecommunications and computers. "Technology is affecting all our lives and neither banks or any other business can hope to survive by turning their backs on it, simply to preserve jobs, " he said. Profits Profitable banks are good for the Australian economy. If banks made lower profits, they would pay less tax, there would be less dividends to the 6.5 million Australians, who directly or through their superannuation, rely on this money for living and retirement and banks would invest less which would be bad news for customers and suppliers. "It is a myth to suggest that de-regulation has led to excessive profits in the Australian banking industry. Recent analysis from the Reserve Bank of Australia concluded that Australian banks today are no more profitable that they were in the mid to late 1980s and comparable to banks overseas, " said Mr Aveling. Re-regulation The FSU has called for more regulation in the financial services sector and has suggested the introduction of the US Community Re-Investment Act. "Australia has no need to import foreign solutions which simply wouldn't work here. For example the US Community Re-Investment Act is primarily concerned with rating banks according to their lending practices and this is simply not an issue in Australia, " said Mr Aveling. "Australia has a safe, secure and highly competitive financial services industry. The self-interest of unions and politicians should not be allowed to prevent Australians receiving the benefits." For further information contact: Heather Wellard ABA PR Phone: 02 8298 0411 Mobile: 0409 830 439     ENDS March 30, 2000 02/00