Two-year-old merger in the news

Some modern banking history receives an airing in The Australian today. ANZ and National Australia Bank, over the early months of 2008, negotiated the principles for a merger between the two banks but failed to persuade the federal government to give the merger the green light.

In early June 2008, and somewhat out of the blue, the Treasurer, Wayne Swan, told parliament that the government "will maintain the existing Four Pillars policy for the banking sector." That occurred at the tail of a week of minor banking policy announcements.

If the report in The Australian is correct, Michael Chaney, chair of NAB, would have served as chair of the combined bank's board. Michael Smith, CEO of ANZ, would have retained the CEO role in the merged entity.

At the time NAB needed a new CEO to replace John Stewart, and ANZ needed a new board chair to replace Charles Goode.

At various stages over the last 14 years one or other of ANZ, NAB and Westpac (though rarely Commonwealth Bank) has agitated for a removal of the policy ban on big bank mergers, with the hope that the ACCC could be persuaded to allow a merger to take place.

The Australian Bankers Association made it a policy priority a few years ago, running what was essentially a national champions' argument.

The former Coalition government (which turned the original "six pillars" policy of 1991, that also covered AMP and what was then National Mutual into "four pillars, in 1996) and then the Labor government, never bought the argument that fewer and bigger big banks was sound policy.