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ISCOVER
Ongoing consolidation in the banking sector hit the headlines again in September with the Australian Competition and Consumer Commission (ACCC) rubber-stamping the $4 billion Bendigo/Adelaide Bank merger.
Adelaide Bank's group managing director Jamie McPhee described the merger as a "positive step" for the future direction of both banks' businesses, while Bendigo Bank's group managing director Rob Hunt expected the move to "provide a strong, diversified, and vibrant alternative" in the industry.
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So should Australia's lenders brace for a wave of new, and arguably stronger, players in their midst?
Community First Credit Union CEO John Tancevski is unconcerned about the potential for increased competition, saying the merger will have "absolutely no impact on the credit union industry".
"If anything, the merger will push the new bank to veer further away from their [Bendigo and Adelaide Banks'] customer-focused models to adopt a more traditional banking one," he said.
Gino Marra, chief executive officer of Carrington National, also dismissed the merger as a "non-event" for the non-bank sector.
"Both Adelaide and Bendigo Bank occupy a completely different wholesale space to the rest of the industry," said Marra.
"A lot of mortgage managers do not deal through Adelaide Bank — so the fact that the merger is happening will have little impact on the industry as a whole."
While the merger has been described by Adelaide and Bendigo as a "partnership to further strengthen the banks' position against competitors", the media has speculated about the role that increased funding costs have played in prompting the union.
The extent to which the non-bank sector follows suit remains to be seen, with at least one lender looking at a merger or acquisition down the track.
Marra revealed to Mortgage Business that Carrington National is eyeing off a number of Queensland and Victorian-based companies as the business looks to expand its footprint outside New South Wales.
"M&As are definitely on the cards and will continue to happen across the industry," said Marra.
"Everything has become more cut-throat — funding has become increasingly difficult, and fraud is also on the rise. Mergers are a way of increasing and expanding your business strategically in the current hard market conditions."
Community First's Tancevski said that while the credit union sector could also see M&A activity, it would be driven by other factors.
"Credit unions practice very different business models to the banks," said Tancevski.
"We are not driven by share price fluctuations, and will merge only to benefit our members from the growth of our market share while continuing the value proposition of the union."
