Shareholders and customers will pay, say bank CEOs

The Federal Treasury will today brief the major banks on the workings of the Government’s bank levy, with each of bank chief executives expressing concern but keeping their powder dry.

While the Australian Bankers’ Association (ABA) took the lead in criticising the bank levy and warned of implications for shareholders, customers and staff, the major banks were not equally animated on the issue.

National Australia Bank’s Andrew Thorburn was amongst the most demonstrative stating the levy was “not just a tax on a bank. It is a tax on every Australian who benefits from, and is part of, our industry”.

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“A tax cannot be absorbed. This tax is borne by these people.  It is not possible to impose a tax without an impact on people, and therefore the wider community,” he said.

ANZ chief executive, Shayne Elliott said the bank tax was regrettable and agreed with Thorburn that it would impact bank shareholders and bank customers.

Elliott did acknowledge the banking industry had made itself an easy political target but stated: “We believe the initial public support for the tax will prove to be misplaced and the speed with which it is likely to pass into law highlights how divisive the banking industry’s relationship with many in Parliament and the broader community has become”.

By comparison, Westpac was more circumspect telling the Australian Securities Exchange (ASX) that it was still working through the details.

Similarly, the Commonwealth Bank chief executive, Ian Narev said that as with the many recent new regulatory imposts, “we need to take some time to work through the implications”.

However he referred to “the lack of detail and the absence of any consultation”.

“… as every business owner or employee knows, every extra cost needs to be borne by customers or shareholders, or a combination of both,” Narev said. "We look forward to Treasury outlining how this tax will apply in practice.”

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