Beware the big four's charm offensive

Watch the banks' actions quite carefully at the moment, for it appears that a serious hearts and minds campaign is underway.

Exhibit one is the National Australia Bank being first to strip away some of the most contentious "exception" charges, that hit people with fees if they accidentally overdrew their accounts. Exhibit two is the National, again, leading the charge in reducing its fees on its everyday banking accounts and credit cards.

Exhibit three might be the ANZ willingly admitting that it will not move up variable rate housing loans outside of the Reserve Bank official movements. And the fourth piece of evidence is Westpac group executive Peter Hanlon claiming that banks were wrong in closing branches, and that it was placing more managers with more powers into the newly revived branches. Just on this last point, I should note that banks in Australia have been increasing their overall branch numbers for the past eight years. In 2001 there were 4,789 branches according to the Australian Bankers' Association. In 2008 there were 5,398.

As well, ATMs increased from 14,027 to 27,081 and eftpos outlets jumped from 404,560 to 669,600. We also not have internet banking. So it would appear as though Peter Hanlon was addressing an issue that was more pertinent more than a decade ago, not today.

But all these words, and actions, suggest the banks want us to love them again. But it's not simply an altruistic community-spirit at work (though there is no doubt some sincerity at senior management levels).

The banks, and their boards, have recognised the broad public antipathy towards them for many years.

It perhaps was sparked by cover of the sadly deceased Bulletin magazine that pronounced: "Why The Banks Are Bastards". The sentiment stuck. The surprise, on researching it, is that the magazine cover was in May 1989 - 20 years ago. It's a long time for such a feeling to hang around.

The banks in the past couple of years had an opportunity to change the sentiment. New chief executives at, especially, the National Australia Bank (Cameron Clyne) and Westpac (Gail Kelly) leaned toward an apparent sensitivity toward the community perception.

Cameron Clyne, in particular, is seeking to alter the ethos of what has traditionally been a hard-bitten commercial bank. In the past, the strength of the NAB allowed it to dictate to its customers the price at which they would be allowed to do business. Perhaps the rising strength of the Commonwealth and Westpac has changed that. What is certain is that Clyne is delivering a quite different message to his three predecessors - perhaps a more sensitive message.

But that sensitivity is underpinned by a hard commercial intent.

By using guarantees to ensure the confidence in the banking industry in the global financial crisis, the Federal Government also gave the big four commercial banks a quite staggering opportunity.

Westpac had already been cleared to takeover St George and, in the midst of the worst of the crisis, the Commonwealth was allowed to takeover BankWest for what will prove to be a ridiculously cheap price (it should make the Commonwealth the stand-out of the banks in the next five years).

As the remaining three big banks reveal their profits in the next week (with combined annual earnings around $15 billion for the big four) you can already see a year in the not too distant future where those earnings are doubled.

In order for banks to report annual earnings upwards of $7-9 billion a year you can only imagine that they will have to maintain the public faith that they are not gouging the public's purse. Any talk of the "four-pillars" of Australian banking being torn down (allowing the big four to merge into a super-two) is long-gone.

The banks, clearly, are equally as sensitive about the Federal Government's attitude as they are about the customers. For the Treasurer Wayne Swan has clearly handed the banks' strong future profitability and the opportunity to parade themselves as some of the safest institutions on the planet. But there is no doubt that flagrant profit-ramping will be viewed dimly, and bring sanctions.

So take advantage of the banks' new benevolence by all means, but be aware that the "new" messages banks are sending out are deliberate, and convey a message that they are highly conscious of their dominant market power

What do you think? Do you trust the banks not to gouge customers for profits? Have your say by commenting below.