1. Westpac PESTEL analysis

1. Political and Legal analysis There are huge amounts of regulations and laws supervising the banking system in Australia. In this paper, we focus on one important and famous regulation: ‘four pillars’ policy. Basically, the ‘four pillar’ is a specific Australian policy to maintain the separation of ‘big four’ banks including Westpac and to prevent any merge and acquisition among these four banks (1997) .In terms of the report from both TUNSTALL (2007) and The Age (2006), the main objective of the policy is to keep the competition of the banking industry. Such the policy is a threat to the Westpac because the increasing competition will lead to shrinking interest margin definitely. And the profit channel such as making loans in domestic market will be in tough condition. While the ‘four pillar’ policy is also a big opportunity for Westpac due to the fact Australian banks were force to borrow offshore under the policy based on the speech of Macfarlane (2009). Additionally, according to the analysis released by IMF (2012), ‘Australia has limited foreign bank presence’. Therefore, it’s a big opportunity for Westpac to build up foreign presence to join the international banks and adsorb the cheaper foreign capital. 1. 2 Social and Economic analysis After the GFC, based on BBC many important economic entities cut their interest rate with the quantity easing policy issued by US, including Australia, to stimulate the domestic economy (2013). Based on the newsletter from Federal Reserve Bank (2011), the continuous low interest rate may lead to greater risk appetite for banks in Australia. For example, heavily investing in long-term asset like Treasury securities would suffer a huge loss if the interest rate rises unexpectedly (2011). From the same newsletter, the benefit brought by the low interest rate is obvious: (1)