Next Wave Of European Super-banks On Way

Sydney Morning Herald

Saturday June 10, 2006

Jessica Irvine

A LOOMING consolidation in the European banking industry will create a new breed of European super-banks and a fresh threat for Australian lenders.

According to a report by global tax and accounting firm Deloitte Touche Tohmatsu, about 700 European banks will disappear over the next three years in a wave of mergers.

The few left standing would be on the prowl and eager to capture a slice of the Australian banking scene, a banking partner at Deloitte Australia, Gerry Schipper, predicted.

"These new giants in Europe are going to come out here along the lines of HBOS," Mr Schipper warned. "They're going to be targeting the big corporate clients like BHP Billiton."

Coming on top of a decade of aggressive plays into Australia by foreign banks such as ING and Citigroup, this fresh wave could hurt.

"The greatest shift in economic power in 200 years will take place over the next few decades," Mr Schipper, said. "Australia and the developed world need to position themselves to meet this."

Australian banks would need to seek their own economies of scale by expanding into Asia.

"I do think we need to build up equity position or joint ventures," he said. The survey found an increasing number of these "east-west" deals were on the cards.

ANZ, Commonwealth Bank and NAB already have investments in Chinese mid-tier banks, with Westpac the only exception.

ANZ recently gained final approval for its 20 per cent stake in Tianjin City Commercial Bank. Mr Schipper said this push to capture a share of Asia Pacific's 440 million account holders would continue.

© 2006 Sydney Morning Herald

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