The Banks Caught Red Handed
17 June 2011
Australia’s banks have been caught out by the Reserve Bank of Australia (RBA) showing they increased their revenue from business customers last year by hundreds of millions of dollars even though business borrowing actually fell, according to the Australian Chamber of Commerce and Industry (ACCI) Australia's largest and most representative business organisation.
ACCI's Chief Executive Peter Anderson said, "the Reserve Bank data released yesterday in its June Quarter Bulletin Banking Fees In Australia directly contradicts claims by the Australian Bankers’ Association yesterday that a $838 million increase in revenue from business last year had resulted from 'increasing volumes” rather than increased fees and charges."
But the same RBA Bulletin that shows the big jump in revenues from business, also makes it clear business credit fell.
On page 25 of their Bulletin, the RBA states:
“Banks’ fee income increased by 13% in 2010 to $6.9 billion despite business credit outstanding falling over the year."
The Chief Executive of the Australian Chamber of Commerce and Industry, Peter Anderson, said:
“This is proof the banks have been offsetting reductions in revenue from housing by slugging their business customers."
The RBA said:
“Most of the growth in business fee income was driven by growth in fees from lending including both loans and bank bill facilities, total lending fee income grew by about 25 per cent."
Peter Anderson said, "banks are clearly taking advantage of the circumstances of business customers by hiking the fees for unused loan facilities."
"Banks are hitting vulnerable customers and in an opportunistic manner, penalising customers who are simply waiting for a return to more normal trading conditions."
"The banks hit customers during the GFC and they’ve been caught out again," Peter Anderson said.
"Many small and medium sized businesses across Australia are struggling right now in a two-speed economy desperately trying to fully recover from the Global Financial Crisis (GFC)."
“It is disappointing in the extreme to see the banks take advantage of people in this way just to maintain their revenues."
“It is not the way to treat Australian business and it highlights again the lack of real competitive pressure in the lending market," Peter Anderson said.