BOQ chief in fresh salvo at big four
It marks another attack on the big banks' dominance by regional lenders, who say regulation favours the majors.
Chief executive Stuart Grimshaw told shareholders at the annual meeting on Wednesday that as the need for regulatory compliance increased, the costs were falling disproportionately on smaller players.
"A related issue that is increasingly occupying the minds of regulators here in Australia and overseas is that the inquiry must address the issue of banks being too big to fail," he said.
"In Australia, the reality is that the funding advantage that the banks currently enjoy creates incentives to become bigger and more complex."
Last week, the government released draft terms of reference and a proposed timetable of the inquiry.
Mr Grimshaw said the inquiry should tackle the differing capital requirements for big and small banks.
"As the banking system becomes more concentrated and complex, that further increases the financial stability risks," he said.
BOQ has been forced to reassure the owner-managers of its branches that it is committed to honouring franchise agreements after revelations it used police and security guards to block owner-managers from entering a Geelong West branch.
A Victorian Supreme Court judge criticised the decision, calling it a "retrograde step".
"The issues are specific to this particular branch and its owners," a BOQ spokesman told BusinessDay.
"We remain absolutely committed to our owner-manager network."
On Wednesday, BoQ warned of slower economic growth in 2014. It returned to profitability last financial year after being the first bank to make a loss in 20 years in 2012.
BOQ reported cash earnings to $119.9 million in 2013.
Frequently Asked Questions about this Article…
The Bank of Queensland is challenging the dominance of Australia's big four banks because they believe the current regulatory environment favors these major banks, making it harder for smaller banks to compete. They are calling for an inquiry into whether these banks are 'too big to fail' and how this impacts financial stability.
The Bank of Queensland is concerned that the costs of regulatory compliance are disproportionately affecting smaller banks. As regulatory requirements increase, these costs become a heavier burden for smaller players compared to the big four banks.
The 'too big to fail' issue refers to the concern that large banks have a funding advantage and incentives to grow bigger and more complex, which could pose financial stability risks. The Bank of Queensland believes this issue needs to be addressed in the government's inquiry into the financial system.
The Bank of Queensland believes that the current capital requirements differ for big and small banks, which contributes to a more concentrated and complex banking system. They suggest that this disparity should be examined in the financial system inquiry.
Recently, the Bank of Queensland had to reassure its branch owner-managers of its commitment to franchise agreements after using police and security guards to block owner-managers from entering a Geelong West branch. This incident was criticized by a Victorian Supreme Court judge.
The Bank of Queensland remains absolutely committed to its owner-manager network, despite recent issues at a specific branch. They have reassured owner-managers of their dedication to honoring franchise agreements.
The Bank of Queensland returned to profitability in the last financial year, reporting cash earnings of $119.9 million in 2013. This was after being the first bank to make a loss in 20 years in 2012.
The Bank of Queensland warned of slower economic growth in 2014, indicating potential challenges ahead for the banking sector and the broader economy.
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