Outsiders eye our Aussie bankers

Ann Sherry says Westpac isn't just defending its market share, it intends to grow. Picture / Getty Images

The sharpest competitive challenges for the four dominant Australian-owned banks will come from aggressive new entrants rather than from among themselves, says Westpac chief executive Ann Sherry.

She said Westpac, ANZ/National, ASB Bank and BNZ were facing challenges from relative newcomers including the local arm of US giant GE Money, Dutch-owned rural lending specialist RaboBank and state-owned Kiwibank.

"It's always hardest when you're the incumbent," said Sherry.

"The sharpest competition is coming from the new entrants who are certainly pricing more aggressively in some sectors and who don't have existing parts of their business that they're looking to maintain."

Some of the new challengers were "monoliners", targeting particular areas of business where they perceived the incumbents might be vulnerable.

"They're just coming at one piece of your business, whereas we have got a broad business base and a broad customer base.

"In a sense, they're coming at that section by section.

"It's tough and I'm not sure there's any one particular area of competition that we're going to be facing. I think it's just going to keep coming at us from everywhere.

"In every sector, competitors are looking to take share away from the major banks."

Recent developments have included GE Money strengthening its New Zealand position with the purchase of Pacific Retail Finance.

GE Money has indicated that credit card offerings and deposit taking are both activities it aims to pursue here.

GE Money achieved scale in New Zealand five years ago when it bought Westpac's AGC hire purchase business.

"GE are a triple-A rated global machine," said Sherry. "They've got global platforms and global capital raising that they leverage.

"Clearly they think they have opportunities here or they wouldn't be here.

"They are formidable. I'd be foolish not to be watching that sort of competitor."

More recently Dutch rural banking giant RaboBank launched several high interest savings and term deposit products, touting itself as the "bank on the side", an attractive alternative to potential customers' long-term banking relationship.

Meanwhile Kiwibank, which continues to compete aggressively on price in the home loan market, yesterday announced it had picked up distribution scale with the purchase of a controlling stake in independent mortgage lender NZ Home Loans.

Sherry said Westpac would not just be defending market share; it intended to grow.

"There's a direct relationship between growth and sustainability. It's about how you keep your organisation renewed over the long term.

"If you stop growing then someone will buy you and you'll disappear, that's not a very sustainable strategy."