OZschwitz: Anti-competition-- Big banks resist changes to guarantee

THE nation's biggest banks have urged the Federal Government to resist watering down the wholesale funding guarantee, which would give the smaller banks equal footing on pricing.

At the same time, ANZ, Westpac and National Australia Bank are pondering whether to soon follow the Commonwealth Bank in looking to raise additional term funding from the credit markets without the need to use the Government's "AAA" rating.

The guarantee gives the Big Four banks a significant edge over their regional competitors because their "AA" credit standing allows them to raise money at a lower cost than the lesser-rated smaller institutions.

Under the current system, the majors pay 70 basis points while smaller banks are hit with nearly double the cost, paying between 100 and 150 basis points.

LNK

OZschwitz: Anti-competition-- Big banks resist changes to guarantee

OZschwitz: Anti-competition-- Big banks resist changes to guarantee

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