Macquarie has decried its inclusion in the government’s bank levy, in a statement stressing its minor market share and low ranking in Australia’s banking ecosystem.
The comments come from the group’s submission to the Senate Economics Legislation Committee which held a hearing with the Australian Bankers’ Association (ABA), the big four banks, Macquarie, ME, Bendigo and Adelaide Bank and the Customer Owned Banking Association (COBA) on Friday (16 June).
The levy will have a “disproportionate impact” on Macquarie Bank, chief financial officer Patrick Upfold wrote in the submission paper.
“Macquarie Bank is not a ‘major bank’,” he said. “Macquarie Bank is predominantly a wholesale business and exporter of financial services.”
While the purpose of the levy has allegedly been to provide a more even playing field in a market where the five affected banks represent 80% of all credit provided, Upfold said that by itself Macquarie held less than 2% of total lending and advances in Australia.
“Putting this into perspective, Macquarie Bank’s Australian mortgage business is not the fifth largest in Australia but eighth, ranking behind ING, Suncorp and Bendigo Bank and just ahead of Bank of Queensland.”
The levy will increase the effective tax rate on the bank from 34% to 41% which was well above the 30% company tax rate, Upfold said.
“We remain surprised the Major Bank Levy applies to Macquarie Bank given our size, the benefit we bring to competition in the domestic retail market and the role we play in bringing export income into the Australian economy.”
Macquarie also suggested a number of changes to the levy including increasing the threshold level for banks to be eligible.
“The levy threshold has been set high enough to exclude regional banks whose domestic presence is larger than Macquarie Bank’s but low enough to ensure Macquarie Bank’s inclusion,” Upfold said.
“To achieve the stated objective of improving competition in the domestic retail market and to ensure Macquarie’s continued success in exporting financial services globally, the threshold should be raised to exclude Macquarie Bank.”