With a combined profit of $28.6 billion last year, surely the big four banks can’t claim to be struggling. Yet that is the cry we are hearing.
Last year the big four banks also slashed 3300 jobs and in the first month of this year, ANZ and Westpac have announced their plans to shed 730 jobs. Yet the CEO of these organisations consistently receive grotesque amounts of money in bonuses, not to mention salary.
Yet again borrowers find themselves waiting with baited breath to find out if today’s anticipated rate cut will make it to their pockets. During previous rounds of rate cuts the big four practically fell over themselves to pass the savings on to customers, wishing to be seen as the ‘good guys’, helping out when times were tough. The Government also introduced legislation to help consumers switch banks if they felt they were not getting a fair deal. A further incentive for banks to do the right thing by consumers.
Now though, there has been a dramatic, almost bolshy, move to defy the Government and consumer pressure to pass on any cut. If all four big banks refuse to pass on the cut and the smaller banks legitimately struggle to do so, what are consumers going to do? Over time the banks have proven that each is as bad as the other, what they give with one hand, they ultimately take with the other.
While lending costs and profit margins are quoted as being the reason behind not passing on cuts, the banks were noticeably reticent to pass on the benefits when times were good. Anyone with money in savings accounts or term deposits will note with a wry smile that the interest rate paid to them hasn’t been quick to move in an upward trajectory. But when interest rates are reduced, the banks are only too happy to cut the income for savers.
YOURLifeChoices notes from recent survey results that the majority of our subscribers live on a fixed income. Many earn interest in savings held in financial institutions and this is what they live on. They are in effect, receiving a reduction in salary every time the banks cut the rate of interest paid on savings.
So, it seems the banks can do what they want. They can charge what they want, pay their CEOs what they want and get rid of staff as and when they choose. Consumers simply have to go with the flow.