Australian banking competition

The Wallis report sensibly tries to build on the role of non- banks. Its price for an end to takeover and merger restrictions on the big banks and insurance companies is sweeping regulatory change to encourage the development of non-bank institutions. The government's initial reaction has been wary... It wants to continue limiting takeovers until there is more competition and to retain the right to prevent all of Australia's prize banks being snapped up by foreign predators.

Yet there is nothing like the threat of takeover to stimulate performance: witness Westpac's efforts in the run-up to Wallis to boost its returns by securitizing mortgages. Fear of foreign predators is also curiously old-fashioned when banks are operating in a global environment and Australian banks own subsidiaries overseas.

-- Financial Times, London