![The Adviser](https://res.cloudinary.com/momentum-media-group-pty-ltd/image/upload/c_fill,e_unsharp_mask:100,g_center,h_389,q_auto:best,w_798/v1657606059/The%20Adviser/basic/default_vvdbbx.webp)
The Bank of Queensland (BoQ) has criticised the government’s funding guarantee scheme for strengthening the big banks’ stronghold over the banking sector.
Ram Kangatharan, the bank’s chief financial officer, said the differentiated pricing for the guarantee which is based on banks’ ratings was “anti-competitive” and not “a true reflection of risk”, The Australian Financial Review reported today.
Under the scheme AA rated banks are charged a fee of 0.7 percentage points to use the guarantee, while this increases to up to 1.5 percentage points for BBB rated banks.
“We think the government guarantee would have operated more efficiently and had faster results had the government actually issued bonds in its own right and then used the funds to allocate to the banks,” Mr Kangatharan said.
The bank’s frustration comes after it sold $500 million worth of three-year bonds at a spread of 115 basis points over the BBSW yesterday compared to spreads of around 85 basis points on similar deals made by the big banks.