World Library  
Flag as Inappropriate
Email this Article

Four pillars policy

 

Four pillars policy

The four pillars policy is an Australian Government policy to maintain the separation of the four largest banks in Australia by rejecting any merger or acquisition between the four major banks.[1]

Contents

  • History 1
  • Legal and policy analysis 2
  • References 3
  • See also 4

History

The policy, originally "six pillars" (it initially included AMP and National Mutual), was adopted in 1990 by then Labor Treasurer Paul Keating. It covered the big four banks (Commonwealth Bank, Westpac, NAB, ANZ) and two insurers (AMP and National Mutual). It was essentially designed to block the merger between ANZ and National Mutual at the time. Keating believed this arrangement would ensure a competitive banking market.[2]

In 1997, leading business figure Stan Wallis (Businessweek bio) produced a report of his inquiry into Australia's financial system (the Final Report of the Financial System Inquiry, commonly referred to as "the Wallis report."[3]) which recommended that the "Four Pillars" model be dismantled, to leave the banks subject to the same merger competition tests as other businesses. In response, then Coalition Treasurer Peter Costello's removed the pillar status of the two insurers (National Mutual had by that time already been acquired by France's AXA), but the ban on mergers of the remaining four banks was retained, with the rider that none of them were considered immune from foreign takeover.[4] With the change of government, new Treasurer Wayne Swan has stated in 2008, that the Labor government has no plans to dismantle the four pillars policy.[4]

Legal and policy analysis

The four pillars policy does not prevent the four major banks from acquiring smaller competitors. For example, in 2000, CBA acquired the

See also

  1. ^
  2. ^ Four pillars back on agenda, The Age, 14 May 2008
  3. ^
  4. ^ a b c Westpac-St George merger won't topple four-pillars, The Age, 15 May 2008
  5. ^

References

The policy has been criticised for being anti-competitive by ensuring that the four major banks are immune from takeover by the most likely suitors. At the same time, it is credited with insulating the banks from the global financial crisis of 2007–08. The major banks have criticised the policy on the basis that limiting the size of Australian banks makes them less internationally competitive.[5]

[4]

This article was sourced from Creative Commons Attribution-ShareAlike License; additional terms may apply. World Heritage Encyclopedia content is assembled from numerous content providers, Open Access Publishing, and in compliance with The Fair Access to Science and Technology Research Act (FASTR), Wikimedia Foundation, Inc., Public Library of Science, The Encyclopedia of Life, Open Book Publishers (OBP), PubMed, U.S. National Library of Medicine, National Center for Biotechnology Information, U.S. National Library of Medicine, National Institutes of Health (NIH), U.S. Department of Health & Human Services, and USA.gov, which sources content from all federal, state, local, tribal, and territorial government publication portals (.gov, .mil, .edu). Funding for USA.gov and content contributors is made possible from the U.S. Congress, E-Government Act of 2002.
 
Crowd sourced content that is contributed to World Heritage Encyclopedia is peer reviewed and edited by our editorial staff to ensure quality scholarly research articles.
 
By using this site, you agree to the Terms of Use and Privacy Policy. World Heritage Encyclopedia™ is a registered trademark of the World Public Library Association, a non-profit organization.
 



Copyright © World Library Foundation. All rights reserved. eBooks from World Library are sponsored by the World Library Foundation,
a 501c(4) Member's Support Non-Profit Organization, and is NOT affiliated with any governmental agency or department.