A few days ago I mentioned that Westpac had raised its standard variable rate double the cash interest rate the RBA had passed on to them. It seems the other banks were more cautious about following Westpac's lead so soon after. They decided to wait and see how Westpac would fare from the backlash, which was sure to emanate via the media and those most unfortunate patrons who still have business with them. Of course the question begs, why did the other banks hold off? And as it looks today, why did they decide not to follow suit?
We have all seen that gesture when someone winks and taps their nose with their finger to denote they are withholding information. Well actually, everyone knows that collusion is happening, but nobody talks about it, unless they are recklessly fearless or an impotent small fry not worth dusting off. It's an unspoken rule we all get, don't we? What Elephant?
Picking a fight with oil companies over outrageous, unqualified holiday petrol price increases, for example, is a futile exercise. When one jumps they all jump. They have perfected the art of disguising collusive behaviour.
Anyway, we all expect if one major bank makes a move then the others will follow. Not to be too conspicuous banks take turns being the leader. They think we do not know (nudge, nudge, wink). The way they normally work is through some tacit agreement (stringently denied by the banks of course) that involves one bank sticking its neck out and advancing something sure to ire people and businesses.
What was unusual this time around was the National Australia Bank (NAB) actually bucked this time honoured trend. How Westpac feels about this traitorous act is probably the reason they are pretty much silent. It will be interesting to see how things pan out.
Whether we believe it or not banks are sensitive to public scrutiny. Shamed and pressed, they can accommodate change. They do manage to recoup their losses in other ways, however, so don't fret too much for them. They are resilient in this regard. You can bet your mother's life that they will never put people over profits.
http://www.theage.com.au/opinion/westpac-executives-are-jumpy-20091202-k6fo.html
Peter Martin: "It's called, "the mating call of banks.""
Julian Lee: "Whatever you may think about Westpac's decision to jump ahead of the market, it is guilty of displaying a breathtaking lack of nous when it comes to marketing."
You think?
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