The current home loan focus of Australia's four largest banks poses a risk to the country's economy, according to former National Australia Bank (NAB) chief executive and BHP Billiton Ltd chairman Don Argus.
In an interview with The Australian Financial Review, Mr Argus said the four largest banks have essentially become building societies with their focus on home loans, warning that if “your banks aren't supporting business initiatives to create growth and jobs, then you finish up like Europe”, referring to the extent to which European banks bought US mortgage bonds in the lead-up to the global financial crisis.
Current figures show the four largest banks control more than 80 per cent of the $1.3 trillion home loan market, with Commonwealth Bank of Australia (CBA) and Westpac Banking Corp alone holding respective market shares of 26.9 per cent and 24.9 per cent.
“If you go too much one way, then clearly that has an impact on your costs and revenues,” Mr Argus told the AFR.
“You've got to get a balance.”
Mr Argus praised NAB, which controls 16.3 per cent of the Australian home loan market, for diversifying the most into Asia, thereby easing its exposure to the domestic mortgage market.