Whilst the banking sector waits breathlessly for tomorrow’s full year Commonwealth Bank result, a very important milestone was passed last week when Westpac’s market capitalisation exceeded National Australia Bank’s for the first time in more than 20 years.

After three straight days of out-performance, Westpac finished yesterday with a market cap of $46.12 billion, whilst NAB lagged behind at $43.51 billion, a staggering $16.5 billion adrift of market leader CBA with its $60 billion capitalisation. The trend has continued this morning with Westpac shares again out-performing all other banks.

Considering that Westpac almost went broke in 1992, Bob Joss and David Morgan deserve much credit for conservatively rebuilding the bank over the next 15 years and market confidence in new CEO Gail Kelly seems to rise with each passing day.

The same has to be said about David Murray’s 13 years in charge at CBA. Sure, he missed opportunities such as buying control of National Mutual in 1995 when insiders were recommending such a move, but the way he leveraged the bank’s brand into businesses such as Commsec has been spectacularly successful.

While Murray presided over the departure of several key executives such as Gail Kelly and John Mulcahy, he also recruited them to the bank in the first place. Current CEO Ralph Norris is highly regarded by the markets and few people realise that Murray actually authorised CBA to pay for him to travel from New Zealand to Sydney for medical treatment at a time when he wasn’t even on the bank’s payroll. That’s called nurturing talent.

Another executive who Murray recruited was The Australian’s columnist Janet Albrechtsen’s husband John O’Sullivan, who left Freehills to make his pile as CBA’s general counsel over the final years of the Howard Government at a time when he was seen to be very close to Peter Costello’s great rival Malcolm Turnbull.

David Murray presided over an uncompromising credit culture at CBA and O’Sullivan was his enforcer, personally signing documents when assets were being seized. The bank played hard ball with unions, bad debtors, consumer groups and governments alike, to the point where independent Senator Nick Xenophon turned up at last year’s AGM representing an aggrieved customer after a 10-year legal battle.

Which brings us to this column by Albrechtsen in The Australian on August 10 where she attacked the Rudd Government’s banking rhetoric.

Neither Janet or any of the 111 comments following her column have acknowledged the conflict of interest here: that her family was significantly enriched by Australia’s banking cartel which delivers consumers the most expensive banking system in the world.

This Crikey story on September 13 last year pointed out that O’Sullivan was paid $2.4 million by CBA in 2006-07 and owned 114,000 shares, which would today be worth $5.1 million. If my family had such a big stake in a government licenced business then I’d be keen for a bit of media protection as well.

The onus here should be on disclosure, although the News Ltd press doesn’t seem to believe in it. Information is power in the modern age, yet there have been all sorts of attacks on the Federal Government for pursuing schemes that would increase the amount of information available to grocery and petrol consumers.

Janet wrote this in her column:

The effect of the Treasurer’s statements is transparent: he wants the banks to cut profits to fund interest rate reductions. But because banks are highly geared, small interest rate reductions which are not supported by falls in overseas debt costs, will mean big cuts to bank profits.

And with the CBA set to report a profit of more than $4 billion tomorrow, Janet will be looking forward to receiving a dividend cheque of about $160,000 in September, which is probably more than she gets from The Australian for a whole year of columns. This represents a clear conflict of interest that should be disclosed.

Janet might argue that her husband’s recent move to Credit Suisse makes such a disclosure redundant, but it all swings on whether the family has retained its large investment in Australia’s banking cartel because she is clearly articulating a policy of shafting consumers to maximise profits.

By the way, the Rudd Government has not discriminated against O’Sullivan for his family’s highly partisan political activities over the years. Nick Sherry re-appointed him to the Takeovers Panel in this largely ignored press release on May 9.

It will be interesting to see if Albrechtsen gets another five year term on the ABC board when her current gig expires in 2010.

*Listen to today’s Babcock & Brown chat with Deborah Cameron on 702 ABC Sydney.

Peter Fray

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