Too much of a good thing can be...horrible

Banks have been gobbling each other up during the crisis as the strong take over the weak and the big take over the small. Mae West once said, "Too much of a good thing can be wonderful." I think in this case she's wrong. Regulators in Australia agree. I was reading in the Australian Financial Review (14 April) that the chairman of the Australian Competitor and Consumer Commission (ACCC), Graeme Samuel, has indicated that the most recent bank consolidation of WestPac and St. George may well be the last one to pass anti-competitive muster. “The risk is with four big banks…we end up with less than intense workable competition.” “We would be looking at further mergers very, very closely indeed. I can’t stress how closely we’d be looking at it. We would not accept at first or second blush the proposition that to not allow this merger would lead to instability to the market. “ In an upcoming Celent report, Too Big to Bail: Banking in the Developed World, Celent will be examining the concentration of the banking markets across the developed world. Two questions face regulators: Are banks getting too big to provide an competitive environment in their home markets? Are banks getting too big to the point that a government wouldn’t be able to bail out the bank? I encourage you to look at the upcoming report.