Commonwealth Bank of Australia responded to a National Australia Bank Ltd. advertising campaign to lure customers by offering cash to clients who switch banks.
Australia’s largest lender is offering as much as A$1,400 ($1,415) to National Australia Bank customers who switch to refinance a home loan, open an account and sign up for a credit card, according to an internal Feb. 18 note sent to Bloomberg News today.
“If they want to play games with price, I’m happy to compete,” Ross McEwan, head of retail banking at Commonwealth Bank, said in a separate note to employees. “We’ll use the opportunity to target their customers.”
The counterattack follows a Feb. 12 offer by National Australia Bank to pay the A$700 fee for customers who leave Commonwealth Bank and Westpac Banking Corp. for a National Australia Bank mortgage. Record banking profits have unleashed public anger in Australia and Treasurer Wayne Swan in December unveiled plans to make it easier for users to switch banks.
Together with Australia & New Zealand Banking Group Ltd., Australia’s main banks are dubbed the “four pillars” after a law preventing takeovers among them. Between them, they control 88 percent of outstanding home loans sold by Australia’s banks, according to December data from the Australian Prudential Regulation Authority.
Alongside the cash incentives to sign up rivals’ customers, National Australia Bank, which trails Commonwealth Bank and Westpac in the mortgage market, has attempted to distance itself from its closest competitors.
On Feb. 15, the bank published a mock relationship breakup letter to the three lenders. “It’s over between us,” started the letter, which appeared in full-page advertisements in newspapers nationwide.
According to local media, the campaign also featured a piano player outside ANZ Bank’s Melbourne offices, actors in restaurants playing out bust-ups over bank fees, and helicopters over the headquarters of Commonwealth Bank and Westpac trailing signs saying: “You’re dumped.”