Thefour pillars policy is anAustralian Government policy to maintain the separation of the four largestbanks in Australia by rejecting anymerger or acquisition between the four major banks.^[1] The policy, rather than formal regulation, first articulated in 1990, reflects the competitive concerns of more concentration as well as the broad political unpopularity of further bank mergers. A number ofeconomically liberalist commentators have argued that the "four pillars" policy is built upon economic fallacies and works against Australia's better interests.^[2]

The top four banking groups inAustralia ranked bymarket capitalisation at share prices at 5 June 2021:

By market capitalisation, the Commonwealth Bank and Westpac are usually the two biggest companies on theAustralian Securities Exchange and the big four banks make up a quarter of theASX200.^[9]

In 1990, the thenLabor TreasurerPaul Keating adopted a policy, originally called "six pillars" — which covered thebig four banks (Commonwealth Bank,Westpac,National Australia Bank,Australia & New Zealand Banking Group and two insurers (AMP andNational Mutual) — that further mergers of these institutions would be rejected. It was articulated in the context of a proposed merger between ANZ and National Mutual. Keating believed this arrangement would ensure a competitive banking market.^[10]

In 1997, leading business figure Stan Wallis^[11] produced a report of his inquiry into Australia's financial system, entitled theFinal Report of the Financial System Inquiry and commonly referred to as "the Wallis report."^[12] Wallis recommended that the "Four Pillars" model be dismantled, to leave the banks subject to the same merger competition tests as other businesses. In response, the thenCoalition TreasurerPeter Costello's removed the pillar status of the two insurers (National Mutual had by that time already been acquired byAXA), but the ban on mergers of the remaining four banks was retained, with the rider that none of them were considered immune from foreign takeover.^[13] With the change of government, new TreasurerWayne Swan stated in 2008 that the Labor government has no plans to dismantle the four pillars policy.^[13]

The four pillars policy has not prevented the four major banks from acquiring smaller competitors. For example, in 2000, the Commonwealth Bank acquired theColonial Group, which had emerged as a major bank–insurance combine in the 1990s, after the Colonial Mutual insurance group took overState Bank of New South Wales in 1994. The Commonwealth Bank also acquired theState Bank of Victoria in 1990 andBankwest in 2008. Westpac acquiredChallenge Bank in 1995,Bank of Melbourne in 1997, andSt George Bank in 2008.^[13]

In 2017, Peter Costello said that the advantage of having big banks under the four pillars policy was stability, which he attributed to Australia faring well during the2007–2008 financial crisis.^[9]

The policy has been criticised for beinganti-competitive by ensuring that the four major banks are immune from takeover by the most likely suitors. At the same time, it is credited with insulating the banks from the2007–2008 financial crisis. The major banks have criticised the policy on the basis that limiting the size of Australian banks makes them less internationally competitive.^[14]

• Banking in Australia
• Big Five (banks), Canada – unofficial policy since the mid-1990s forbids mergers among them
• Financial regulation in Australia
• Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry
• Too big to fail

• Banking in Australia
• Government of Australia
• Banks of Australia
• Economic policy in Oceania
• Banking controversies

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