Gov t delay threatens Bankwest s profit
Gov't delay threatens Bankwest's profit

Bankwest's profitability faces an imminent hammer blow because the State Government is struggling to draft laws that will safeguard the bank as a WA-based institution and still allow it to access cheap finance from parent company Commonwealth Bank of Australia.

With the June 30 deadline for sensitive changes to the Bank of WA Act bearing down, the Barnett Government is yet to finalise the legislation, let alone pass it through both houses of Parliament and obtain royal assent.

Failure to amend the Act by the end of the financial year will make it illegal for Bankwest to keep tapping CBA for funds and will force the local bank to go to more expensive wholesale markets, a change which former Bankwest boss Jon Sutton described in October as "unsustainable".

During CBA's takeover of Bankwest, the Australian Prudential Regulatory Authority waived until the end of next month normal rules that require "deposit-taking institutions" to have just one banking licence.

APRA made the concession to allow time for amendments to the Bank of WA Act, which stipulates that Bankwest must have its own licence, as well as a designated board and a State-based managing director.

The Act was introduced in 1995 to safeguard the interests of its staff and customers following the bank's partial takeover by the then-Bank of Scotland.

Treasurer Christian Porter said the Government was "moving on the legislation as quickly as possible" but refused to guarantee the revised laws would be in place by the time APRA's grace period ended.

He confirmed the holdup was due to the Government's insistence that any legal changes did not absolve CBA of the requirement to keep Bankwest as a stand-alone WA entity.

Critics have warned any move to amend the Bank of WA Act would pave the way for CBA to dissolve Bankwest, mirroring the demise of myriad WA brands before it.

Challenge Bank, Home Building Society and Town & Country have all disappeared from the WA landscape following takeovers by nationally focused counterparts.

Shadow Treasurer Ben Wyatt said the legislative delay was unacceptable.

A Bankwest spokesman said the bank was committed to maintaining a strong presence in WA, under any new regulations.

The West Australian

Popular videos

Our Picks

Follow Us

More from The West