Long-suffering bank customers may have to grin and bear reduced competition in the banking sector while the federal government contends with the global credit crisis.
While his ministers are telling consumers to switch banks if they're getting a bad deal, Prime Minister Kevin Rudd admits competition isn't his first priority.
Major regional banks St George and BankWest look set to be swallowed by Westpac and the Commonwealth Bank, reducing the number of players in the market.
But Mr Rudd today hinted choice may have to be sacrificed, if it is at the cost of banks staying afloat.
"If it becomes an apparent conflict between stability and competition, right now this prime minister ... will be backing stability first and foremost," he told reporters.
"Competition questions can be resolved over time. The stability of the system is of fundamental importance ... to every working family in the country, every pensioner and carer."
The government has been advising disgruntled homeowners to "vote with their feet" when banks upped mortgage rates by a bigger margin than the increase in the official cash rate.
But it's taken a softer line since the eruption in world financial markets, refusing to castigate financiers over their failure to pass on a full one percentage point cut to homeowners.
Following Tuesday's decision by the Reserve Bank of Australia, the big four banks have cut rates by 0.8 of a percentage point, while some smaller lenders shaved mortgage rates by 90 basis points.
None have followed the lead of their stressed British cousins, which passed on the full reduction to customers.
The British banks have, however, received major taxpayer support, with the government part-nationalising the eight big banks as part of a package worth up to $A1.23 trillion to prevent a collapse of the UK banking system.
Australia's banks are meanwhile facing attack on another flank - credit card interest rates have not come down despite the RBA move.
Finance Minister Lindsay Tanner's advice for credit card customers was to "shop around".
"We would just urge people to ... ensure that they are keeping the pressure on their banks and switching banks if they feel they're not getting a good deal," he told ABC Radio.
Opposition treasury spokeswoman Julie Bishop demanded the government do something and stop being an apologist for the banks.
"Over the last two weeks the Rudd government has surrendered to the big banks and has taken pressure off the big banks to pass on in full any interest rate cut from the Reserve Bank," she told reporters.
"Today Finance Minister Lindsay Tanner surrendered again to the banks over the interest rate on credit cards ... now this government has got to start standing up for households ... and stop being an apologist for the big banks."
Australia's banks are weathering the current financial storm much better than their international counterparts, getting a tick of approval from the International Monetary Fund overnight.
Looking at the health of their balance sheets, the IMF ranked banks in Australia fourth out of 134 countries.
Commonwealth Bank is capitalising on its strong financial position to buy WA-based BankWest from its British parent HBOS, reaffirming its position as the nation's biggest bank.
It comes on the heels of the proposed mega-merger between Westpac and St George.
Christopher Zinn, of consumer advocacy group Choice, warned there was the potential to compromise competition with decisions made at the height of the global crisis.
"There's no doubt these are exceptional times but the gravity of the moment shouldn't overwhelm those longer more lasting considerations about competition," he said.
"Once the cat's out of the bag, once you've lost those institutions, it takes time to get other players into the market."
