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Commonwealth bank losing market position: Moore



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JOHN MOORE MP SHADOW MINISTER FOR

COMMONWEALTH P A R L IA M E N T A R Y LIBRARY MICAH

BUSINESS and CONSUMER AFFAIRS COMMONWEALTH RANK LOS TNG MARKET POSTTTON: MOORE

The Commonwealth Bank is destined to become a market irrelevance within five years unless there's an immediate change in government policy, according to

John Moore, Opposition spokesman on privatisation.

"In the absence of a major capital injection the bank will continue to flounder at the bottom of the performance tables.

"The bank's senior management have warned of the consequences of sustained capital deprivation and more than once they have raised the privatisation issue with the Treasurer.

"The lack of new investment capital is impacting heavily on the bank's corporate objectives and competitiveness:

- Unlike the private Australian banks it is unable to consider overseas acquisitions, therefore its revenue base is narrowed and its capacity to service international customers is limited;

- Less resources are available to devote to new banking technology particularly in retail banking.

- The bank continues to lose valuable market share which is costly to win back once foregone.

- The bank has been forced to bolster its capital base using the Eurodollar market rather than having the option of a domestic rights issue.

"The viability of the bank as a top market performer rests with the Federal Government and its willingness to allow the full privatisation of its operations.

"The Federal Coalition is committed to this path and I believe the Commonwealth Bank will be the second major privatisation candidate after Qantas, Mr Moore said.

"The size of the flotation will be very large by Australian standards and to ensure a full subscription the process will be phased and marketed widely to all Australian's.

"Central to the sale will be giving full opportunity to smaller sharehoders and offering up to 10% of the bank's capital to employees.

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12 January, 1988 071 - 44 3128

062 - 77 4135