Big Banks Up, Regionals Down On Banking Reforms

Australia’s four biggest banks soared whilst regional banks fell in the market on Monday after the release of Federal Treasurer Wayne Swan’s banking reforms over the weekend.

The value of Westpac, Commonwealth Bank, National Australia Bank and ANZ rose $3 billion during Monday’s trading, reflecting the market opinion that the ‘big four’ would not be adversely affected by the reforms.

Westpac saw the biggest gains, rising 35 cents to $22.92 with Commonwealth up 58c to $51.17, NAB up 31c to $24.53 and ANZ rising 23c to $24.06.

However, the shares of smaller regional banks such as Bendigo & Adelaide and Bank of Queensland feel steeply. Bendigo shares dropped 35c to $9.90, whilst the Bank of Queensland decreased 38c to $10.99.

Some of Mr Swan’s most impacting reforms include a ban on mortgage exit fees from July 2011 and stricter regulations on price signalling.

Whilst Monday’s market response suggested that the reforms would do little to affect the performance of Australia’s largest banks, analysts were concerned that proposals could be potentially damaging to smaller banks and loan providers.

Without exit fees, smaller lenders may be forced to increase mortgage rates, ultimately impacting on the Australian home buyer.

Mr Swan hopes that the reforms will introduce more competition into the banking sector and reduce the financial burden for mortgage holders.

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