The major banks are putting the squeeze on small businesses, forcing them to channel their deposits to the big banks if they wish to access a loan in the future.
One year ago, the big four banks controlled 68 per cent of the small deposit market. Today however, they account for 84 per cent, according to data from East & Partners.
Financial market analyst Peter Drennan told The Australian Financial Review that the majors currently want to lock up all the banking of their small and medium enterprise clients.
“They are saying ’if you want a loan then you will have to move your deposits to the bank.’ That’s not necessarily in the best interest of the small business, but as they need the loans that’s what they decide to do,” he said.
According to Canstar Cannex financial analyst Peter Arnold, the big four banks want to have as much of an SME’s banking business as possible, including loans, deposits and transaction accounts.
Similarly, Mr Arnold said SMEs were feeling pressured to put their deposits with the major lenders for security purposes.