Keating slams govt for giving banks too much power

Government should exercise its regulatory role more strictly, said former Prime Minister Paul Keating.

In a wide-ranging interview with BusinessDay, Mr Keating said there should be no more mergers between the big banks - Westpac, Commonwealth, National Australia and ANZ - arguing that keeping the four lenders separate would protect customers and minimise risks of a banking crisis spreading to Australia, as stated in a report in the Sydney Morning Herald.

He also called for the wealth management giants, AMP and Axa Asia Pacific, to be quarantined from any predatory move by the banks, warning the nation's funds management industry should be protected.

The former Labor leader and long-serving federal treasurer hit out at Commonwealth Bank's $2.1 billion move on BankWest last year, arguing that regulators should have been prepared to support the lender through the financial crisis rather than let it be acquired by one of the big four.