Profit-hungry banks attack jobs

by Peter Mac

The proposed Commonwealth Bank takeover of the Colonial Bank revealed last 
week could result in the loss of 2500 staff positions, as well as the 
closure of 250 bank branches, in NSW alone. The Finance Sector Union (FSU) 
has estimated that the total number of jobs lost as a result of the merger 
could eventually be as high as 10,000, with a total of 1000 branch 
closures. "Regional banking as we know it would be finished", said FSU 
National Secretary Tony Beck.

The day after the news of the proposed banking takeover, Telstra Corp's 
chief executive Ziggy Switkowski announced plans to shed another 16,800 
jobs and sell off its highly profitable Network, Design and Construction 
(NDC) division (see page 4 for details).

The Commonwealth Bank, not satisfied with last year's $1.4 billion profit, 
is pursuing even richer rewards for its shareholders, in its proposed 
takeover of the Colonial Bank, even though this involves the mass sacking 
of staff and cuts to services.

The merger of the two banks is likely to result in the loss of 2500 staff 
positions, as well as the closure of 250 bank branches, in NSW alone.

The Finance Sector Union (FSU) has estimated that the total number of jobs 
lost as a result of the merger could eventually be as high as 10,000, with 
a total of 1000 branch closures.

"Regional banking as we know it would be finished", said FSU National 
Secretary Tony Beck.

Attempting to defend the closures, the Commonwealth Bank said that it 
intends to leave one branch of the bank operating in every town where 
either of the two banks currently operate — or at least for the time 
being.

Bank spokesman David Murray took refuge in an appeal to patriotism, 
declaring that the merger would be "good for the nation", because otherwise 
Australian banks were likely to become branches of foreign businesses.

Any suggestion that the behaviour of the banks should be again subject to 
regulation has been rejected by the Australian Bankers' Association (ABA), 
which cites the number of bank "branches" being established in 
supermarkets, Australia Post shops and franchise outlets.

Ignoring the high interest rates, the high profits and fees, the lack of 
competition, and the dwindling number of banks and branches, an ABA 
spokesman noted that "people who want to turn the clock back to the bad old 
days of regulation seem to have forgotten how housing loans were rationed, 
there was little competition, bank margins were high, there was little 
product choice and banks were only open between 10am and 3pm."

The Australian Democrats have indicated that they will oppose the merger 
proposal. Democrats leader Meg Lees said last week that: "The combined 
profits of the four major banks in the last financial year indicate that 
they are having little difficulty making massive profits. In fact their 
profits equate to about $20 million per day after tax."

With regard to the proposed closures and job losses, Ms Lees noted that: 
"In Tasmania alone there have been 35 bank closures in the last five years. 
This equates to about 25% of bank branches overall.

"In fact, the House of Representatives Inquiry into Regional Banking 
Services in 1998 was told that as many as one in three major bank branches 
in rural communities had been closed....

"EFTPOS is simply not adequate, as it cannot be used to conduct deposit 
transactions or pay bills. Shopkeepers in rural centres become de facto 
bankers. ... So far, ordinary Australians are paying more and getting less 
in the way of banking services", said Ms Lees.

The result of bank mergers is nowhere more evident than in the merger of 
the Bank of Melbourne with the Westpac Bank in 1996.

Despite assurances to the contrary given by Westpac to government 
regulators, the merger resulted in the closure of more than 120 bank 
branches and the loss of 1000 jobs.

In the wake of this and other mergers and bank closures, the Federal 
Government offered to set up 500 new Regional Transaction Centres, where 
the public could do business with any of the banks. However, to date only 
about 23 have opened.

The takeover has also exposed the hollowness of the Federal Government's 
"four pillars" policy. Under this policy, so the Government argues, there 
would be a vigorously competitive banking system, with no fewer than four 
major banks.

However, as the FSU described it, the result of the Commonwealth Bank's bid 
will lead to a "feeding frenzy" of merger proposals by the other major 
banks. This in turn is likely to lead to further massive job losses and 
branch closures, not to mention a great reduction in competition within the 
banking sector, with the "four pillars" being virtually the only domestic 
banks left operating.

The Federal Howard Government has the power to block the merger, but such 
an action on the Government's part would be nothing short of miraculous.

Prime Minister Howard's smile, as he described the proposed amalgamated 
bank as "a wall, not a pillar", said it all.

Federal Treasurer Peter Costello is said to have already met with senior 
officials of both banks last week, and to have expressed his satisfaction 
with the merger proposal.

In response, Tony Beck commented that "It is frightening to think that the 
Treasurer has made his mind up on this merger after only talking to the 
very senior executives who have most to gain from the merger.

"We are calling on the Prime Minister to reassure the public that his 
Government will listen to the community and not just senior bank executives 
before it rules on this proposal. There are serious issues for the 
community in the merger. Jobs, access to financial services and the future 
of regional banking are all on the line and the community must be heard."

"It's time for the Federal Government to stand up and be counted on the 
issue of the banks, to act in the interests of the community and jobs by 
stopping this merger and establishing a Charter of Community Service 
Obligations for the banks", said Mr Beck.

The Australian Competition and Consumer Commission has announced that it 
intends to examine the takeover proposal very closely, in an enquiry 
expected to last about eight weeks.

The Commission could recommend to the Government that the merger should not 
take place. However, it remains to be seen what if anything, the Commission 
will do about it.

On past performance, some expression of concern is the most that can be 
expected.

As Tony Beck noted: "The ACCC will consider the competitive implications of 
any proposed merger. But who will consider the impact on the staff who will 
lose their jobs, or the regional and remote communities who risk losing 
their access to essential financial services?

"The fate of these people is in the hands of the Government and the Prime 
Minister needs to ensure that their needs are properly considered."

An interesting comparison is the proposed takeover of the Japanese firm 
Mitsubishi by Chrysler/Daimler. Mitsubishi has stipulated a number of 
conditions under which it would accept the proposal, most notably that all 
employees would be retained in the aftermath of the takeover.

But that's not good enough for the Commonwealth. What an irony! It was 
originally founded as a "people's bank", with the aim of providing banking 
services at prices that most people could afford.

The Commonwealth Bank was privatised by the Keating and Howard Governments, 
and is now functioning just like its most rapacious competitors. "Greed is 
good" at the Commonwealth Bank!