EMBROILED in home loan wars for the past few months, the nation’s major banking institutions have turned their attention to business banking during the past week.
EMBROILED in home loan wars for the past few months, the nation’s major banking institutions have turned their attention to business banking during the past week.
This comes as the Reserve Bank of Australia released a report into access to finance for small businesses, revealing a slowdown in lending to small businesses during the past couple of years.
It was NAB’s launch of the ‘break up with your bank’ campaign last week that seems to have ruffled the feathers of rivals Commonwealth Bank and Westpac.
Instead of attacking the home loan market, CBA and Westpac have decided to launch full-page advertisements promoting their business-banking sector.
Taking aim at NAB with a creative play on words, CBA tells its business banking customers “don’t get nabbed by a liquidity margin,’ stating that ‘one bank’ increased its liquidity margin by 0.3 per cent on top of its base rate.
Westpac’s ‘Switch now-zero hassle’ campaign offers to waive establishment fees, monthly account keeping fees and cover up to $20,000 in switching costs on new business loans over $100,000.
The RBA report shows that about 60 per cent of businesses found the global economic climate and a general deterioration in confidence was an impediment on business activity.
However, Westpac state general manager Jay Watson said small businesses were becoming more optimistic and the big banks were aiming to capitalise on this.
“Right now there is a very competitive landscape and we are seeing it start to play out, with several campaigns being run by big banks in an attempt to attract the SME market,” he said.
The RBA attributed the slowdown in small business credit growth over the past couple of years to a combination of the uncertain economic outlook and a general tightening in banks’ lending standards.
NAB general manager WA Andrew Whitechurch said it was not so much that banks did not want to lend, but rather there was no demand for debt from small businesses.
“People who run small businesses are taking a more conservative approach and there is a lot more lending we would like to do, but there is just no demand for it at the moment,” he said.
The inquiry also shows that, during the past couple of years, there has been a decrease in small business lending by the smaller banks and non-financial institutions.
By way of contrast, the major banks have continued to increase their lending in recent years, resulting in a significant jump in their market share, which accounts for about 70 per cent of total business credit.
According to WA Business News ‘2011 Book of Lists’, Bankwest has the largest number of business banking staff in WA with 519 staff, which is closely followed by NAB with 476.
Smaller lending institutions such as Bendigo Bank, Rabobank Australia and HSBC, have smaller numbers of business banking staff in WA.
Mr Whitechurch said competition between the big banks had become fierce, since the smaller banks have “fallen off the market”.
“There is a reduction in the appetite of some lenders than what was there before. Some of the non-bank lenders have stepped out of the market, so there is less supply. So the major banks have increased their market share almost filling that void,” he said.
