Leslie Massey
Australia's Big Four banks, including CBA, NAB, ANZ, and Westpac, have been criticized for their involvement in controversial projects and their failure to uphold their human rights commitments. The banks have faced scrutiny for their lending practices, with allegations of repeatedly breaking laws and disregarding regulatory concerns. Despite their collective assets worth around $3.8 trillion and a substantial market share, the banks have been accused of misconduct and failing the public. With their dominant position in the industry, the Big Four banks' actions have significant implications for the Australian economy and the trust of their customers.
| Characteristics | Values |
|---|---|
| Colloquial name | Big Four or Big 4 |
| Number of banks | 4 |
| Members | Commonwealth Bank of Australia (CBA), Westpac Banking Corporation (WBC), National Australia Bank (NAB), and Australian & New Zealand Banking Group (ANZ) |
| Total assets | $3.80 trillion |
| Market share | 70% |
| Largest institutional shareholder | The Vanguard Group |
| Other shareholders | Retail investors, BlackRock, State Street |
| Accusations | Breaches of the Corporations Act and the National Credit Act, human rights violations |
| Scrutiny | Australian Securities and Investments Commission (ASIC) |
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What You'll Learn
Australia's big four banks reported a record profit of $32.5 billion
Australia's big four banks—CBA, NAB, ANZ, and Westpac—reported a record profit of $32.5 billion, up 12.4% compared to the previous financial year. This profit was driven by surging net interest margins, which were, in turn, influenced by the Reserve Bank of Australia's (RBA) tightening of monetary policy. This policy increased net interest margins by an average of 9 basis points over the last financial year for the major banks.
The big four banks' profits are a sensitive topic in Australia, with many Australians facing rising stress due to interest rate hikes. However, it's important to recognize that Australians both gain and lose from these profits. On the one hand, superannuation and stock holdings benefit everyday Australians who own shares in the big banks. On the other hand, there is concern about the risk of rising bad debts caused by a weakening economy.
The big four banks' performance is significant in the context of Australia's "four pillars" policy, which prevents these banks from taking over each other. This policy has been maintained even through economic challenges, such as the Global Recession of 2008-2009. The banks' resilience is further demonstrated by their ability to navigate strong competition from existing and new players in the market, including non-bank lenders.
Looking ahead, UBS strategist Richard Schellbach and Goldman Sachs analyst Andrew Lyons offer optimistic outlooks. Schellbach points to positive global indicators, while Lyons predicts continued tailwinds for bank margins, although he cautions about the risk of rising wholesale funding costs.
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The Reserve Bank of Australia's monetary policy tightening
The Reserve Bank of Australia (RBA) is responsible for the country's monetary policy, which involves setting the interest rate on overnight loans in the money market, or "the cash rate". The cash rate influences other interest rates in the economy, affecting the behaviour of borrowers and lenders, economic activity, and, ultimately, the inflation rate.
The RBA's monetary policy tightening has led to an increase in net interest margins for the major banks, with a rise of 9 basis points over the last financial year. This, in combination with a 7.3% increase in interest-earning assets, has resulted in a 13.8% increase in net interest income for the big four banks, totalling $74.9 billion.
The RBA's interest rate hikes have had a positive impact on banks, allowing them to charge more for money. However, this has negatively impacted mortgage holders, who are facing rising stress due to increased interest rates. The RBA's monetary policy decisions aim to balance the interests of these stakeholders, focusing on maintaining price stability, full employment, and economic prosperity for Australians.
The RBA's mandate includes keeping inflation within a target range of 2-3% while maximising employment levels that support low and stable inflation. While the RBA's tightening policy has contributed to a weaker outlook for growth, employment, and inflation in Australia, it remains attentive to data and evolving risk assessments to guide its decisions. The RBA considers developments in the global economy, financial markets, domestic demand trends, and the inflation and labour market outlook.
Uncertainties surrounding monetary policy effectiveness, firm pricing decisions, wage growth, and geopolitical factors continue to pose challenges for the RBA in achieving its objectives.
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The Vanguard Group is the largest institutional shareholder
Australia's big four banks refer to the four largest banks that have historically dominated the country's banking industry in terms of market share, revenue, and total assets. These banks are the Commonwealth Bank of Australia (CBA), the National Australia Bank (NAB), the Australia and New Zealand Banking Group (ANZ), and the Westpac Banking Corporation (Westpac). These banks reported a record full-year profit of nearly $32.5 billion, while over 1.5 million mortgage holders face rising stress amid interest rate hikes.
The largest institutional shareholder across the big four banks is The Vanguard Group. Vanguard is an American investment adviser founded in 1975 and based in Malvern, Pennsylvania. It has satellite offices in several US states, Canada, Australia, Asia, and Europe. With about $10.4 trillion in global assets under management, it is the largest provider of mutual funds and the second-largest provider of exchange-traded funds (ETFs) in the world. Vanguard offers a range of services, including brokerage, educational account services, financial planning, asset management, and trust services.
Vanguard's unique structure sets it apart from other investment firms. The company is owned by its funds, and these funds are owned by its customers. This means that Vanguard does not have outside shareholders, allowing it to prioritize the needs of its investors. Vanguard was founded by John C. Bogle, who created the first index fund available to individual investors and was a proponent of low-cost investing. Bogle's vision for Vanguard was to create a place where retail and individual investors could build wealth without needing the services and expenses of a broker.
Vanguard's role as the largest institutional shareholder in Australia's big four banks highlights its significant influence in the country's banking sector. Through its holdings and funds, Vanguard has a vested interest in the performance and profitability of these banks. As an institutional shareholder, Vanguard represents the interests of its investors, including everyday Australians who hold shares in the banks through their superannuation and stock holdings.
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The big four banks' human rights policies are not being taken seriously
Australia's big four banks—ANZ, Commonwealth Bank, NAB, and Westpac—have come under fire for their involvement in a $1.5 billion loan to Santos, a company attempting to develop the controversial Barossa gas project off the Northern Territory coast. The Tiwi Islands and Larrakia Traditional Owners lodged formal complaints, alleging that the banks breached their human rights commitments by participating in the loan. This is not the first time these banks have been accused of misconduct and failing to uphold the law.
In 2018, a judicial inquiry revealed that Australia's top banks routinely and repeatedly breached laws when issuing home loans, credit cards, and other consumer loans. The inquiry, known as the Royal Commission, found that the banks, including the Big Four, had engaged in misconduct and failed to comply with the Corporations Act and the National Credit Act.
The Australian Securities and Investments Commission (ASIC) had previously raised concerns about Westpac's lending practices as early as 2012, but the bank ignored the regulator and continued with its practices. ASIC's concerns were validated when, in 2015, a memo disclosed in the inquiry revealed that Westpac was the most resistant to complying with ASIC's regulations.
The Big Four banks hold a significant presence in the Australian market, with the major banks collectively holding assets worth around $3.80 trillion, or about 70% market share. They reported a record full-year profit of nearly $32.5 billion, a 12.4% increase compared to the previous financial year. The largest institutional shareholder across the big four banks is The Vanguard Group, which holds a significant number of shares directly and through other fund managers.
Despite their significant financial success, the big four banks' involvement in the Santos loan and their history of legal breaches call into question their commitment to human rights and social responsibility. Their failure to uphold the law and respect the rights of Traditional Owners demonstrates a lack of regard for their stated human rights policies. This indicates that the banks are not taking their human rights commitments seriously and are prioritizing profit over ethical and legal obligations.
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The big four banks repeatedly breached laws
Australia's big four banks—National Australia Bank (NAB), Commonwealth Bank of Australia (CBA), Australia and New Zealand Banking Group (ANZ) and Westpac Banking Corp (WBC)—have been criticised for repeatedly breaching laws and failing the public. A year-long inquiry, known as the Royal Commission, found that the banks failed to act honestly and fairly, breaching their legal obligations to lend responsibly. The inquiry also revealed that the banks routinely broke laws when issuing home loans, credit cards, and other consumer loans.
The Royal Commission's interim summary focused on instances of misconduct by the consumer credit units of several major financial institutions, including the big four. The inquiry was ordered by the centre-right government in response to a series of banking scandals, including interest-rate rigging and breaches of anti-money laundering laws by CBA. The final recommendations from the inquiry could lead to criminal or civil prosecutions and greater regulation of the financial sector.
The big four banks have been criticised for their resistance to the Australian Securities and Investments Commission (ASIC) and the laws it administers. A 2015 ASIC memo about a meeting with Westpac Chairman Lindsay Maxsted noted that Westpac appeared to be the most resistant to ASIC out of the big four banks. The memo was disclosed during the Royal Commission inquiry.
In addition to legal breaches, the big four banks have also been the target of cyberattacks. In April 2025, cybercriminals stole almost 100 staff logins from the big four banks, compromising the businesses and putting them at higher risk of mass data theft and ransomware attacks. The logins were stolen using "infostealers", a type of malware designed to harvest valuable data from computers and phones. While the banks have protections in place to prevent unauthorised access, researchers warn that attackers could use the stolen logins to gain initial access and break into the banks' systems, potentially installing ransomware and stealing massive amounts of customer data.
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Frequently asked questions
The "big four" Australian banks are the four largest banks that have historically dominated Australia's banking industry in terms of market share, revenue, and total assets. They are the Commonwealth Bank of Australia (CBA), Westpac Banking Corporation (WBC), National Australia Bank (NAB), and Australian & New Zealand Banking Group (ANZ).
The "four pillars" policy was introduced in 1990 by then-Labor treasurer Paul Keating. It is a longstanding policy that prevents mergers between the big four banks to preserve a level of competition.
The big four banks have faced criticism for making record profits while many mortgage holders face stress due to increased interest rates. The banks argue that their profits are driven by surging net interest margins and that Australians both gain and lose from these profits, with many everyday Australians holding shares in these banks through superannuation funds.
The RBA's tightening of monetary policy has increased net interest margins for the major banks, contributing to their record profits. However, the RBA's interest rate hikes have a complex impact, as banks are known for passing on rate hikes to borrowers without doing the same for depositors.
Yes, the big four banks have been criticized for financial scandals, including interest-rate rigging and breaches of anti-money laundering laws. In 2018, a Royal Commission inquiry found that Australia's top banks routinely breached laws when issuing loans and engaged in misconduct falling below community standards and expectations.
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