08S7A's Economics Blog
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Tuesday, May 13, 2008
posted byHuiqi(:


Here's the link to an article on the merger of two banks (St. George and Westpac Banking Corporation) in Australia:

Type of market structure: Oligopoly

There are five major players in the banking industry:
  1. CBA (Commonwealth Bank)
  2. NAB (National Australia Bank)
  3. Westpac - 3rd largest
  4. ANZ
  5. St George - 5th largest

Why the 2 banks will want to merge:

01. Revenue advantages

"The combined group would have about 10 million customers and a 25 percent share of the Australian home loan market."

Since they will have a larger client base, they will get to deal wtih more deposits and engage in other services that consumers require. Thus, they have the opportunity to increase total revenue and profit.

02. Cost advantages

M arketing
R isk-bearing
F inancial
"Together, Westpac and St George would have a strong AA credit-rating, a larger balance
sheet and greater access to funding."

A dministrative & managerial
T echnical

8:28 AM