The Four Pillars Policy was established by the Australian Federal Government to be administered by APRA (Australian Prudential Regulation Authority) and ACCC (The Australian Competition and Consumer Commission). The basic principle behind the policy is that Australia's four largest banks are unable to merge with one another while the policy is inplace. The four 'big' banks (in order) being:

The National Australia Bank Ltd - CEO: Frank Ciccutto
The Commonwealth Bank of Australia Ltd - CEO: David Murray
Westpac Bank Ltd - CEO: Dr David Morgan
Australia and New Zealand Bank (ANZ) Ltd - CEO: John MacFarlane

All four CEOs of the banks, which are publicly listed, have expressed in one form or another their disapproval of the four pillars policy. John MacFarlane did so most recently.

The Government's theory is that if these banks are prevented from merging then the banking industry will not become a duopoly or even monopoly, allowing banks to fix high fees on transactions and other banking exclusive services.

Contrary to this is the opinion that by not allowing the banks to merge there are significant inefficiencies in the industry that will, in the long run, be more detrimental to the economy that if the banks had just been allowed to merge.

Of course, the policy does not specify prohibition of the taking over of non-Big Four banks, which are looked at on a case by case basis by the ACCC. In the last two years several takeovers have taken place, including: Commonwealth Bank's $A9b takeover of Colonial State Bank and National Bank's $A4b takeover of MLC (a financial services/fund manager institution). The most obvious target now is St George Bank which will soon hold a shareholder vote to allow other entities to hold more of its shares and even take it over. Once this takes place one would expect a bid bid from National Bank which already holds 10% of stock in St George.

The current John Howard Government continues to hold firm on the Four Pillars Policy and it is unlikely that one will see a slackening of it in the near to medium term.

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