FED:Stevens defends Bankwest merger

AAP General News (Australia)
12-13-2010
FED:Stevens defends Bankwest merger

CANBERRA, Dec 13 AAP - Reserve Bank governor Glenn Stevens has defended advice he gave
the competition watchdog ahead of the sale of Bankwest to Commonwealth Bank of Australia
Ltd in 2008.

The sale of Bankwest, and of St George Bank to Westpac, have been criticised for reducing
competition in the banking market.

Mr Stevens, facing a Senate inquiry hearing into banking competition on Monday, said
Bankwest was in a situation where its parent company in the UK - HBOS - was struggling.

Bankwest was going to be sold one way or another, he said.

"I think in the environment that we were in, you don't want an institution with a weakened
parent to be sort of twisting in the wind while they work out in the UK what they are
going to do," Mr Stevens told the hearing.

"That was the situation we were facing."

Mr Stevens said stability was the key during the depths of the global financial crisis
and the Commonwealth Bank had been found as a potential buyer.

"Were I to be faced with that situation again, I don't think you have much but to err
on the side of stability," he said.

In normal circumstances, debating competition was a luxury and that was the job of
the Australian Competition and Consumer Commission.

"In situations of potential crisis it's our job to try and preserve stability, which
is what we sought to do."

Mr Stevens could not recall whether he had offered advice on the merger between Westpac
and St George.

AAP cb/rl/dlm/maur

KEYWORD: BANKING RBA BANKWEST

� 2010 AAP Information Services Pty Limited (AAP) or its Licensors.