Former Australian Prime Minister Paul Keating has criticised the Rudd Government for not doing more to preserve competition in the banking sector. Mr Keating also warned that the growth of the big four banks during the global financial crisis presents a „systemic risk“ to the Australian economy. While governments were preoccupied with protecting their economies from the worst of the crisis, Mr Keating maintains the Rudd Government could have done more to preserve competition in the banking sector.

- That's what happens in a crisis, everyone runs for cover, - he told ABC Radio.

Westpac became Australia's second biggest bank in December when it completed a $15 billion takeover of St George, while the Commonwealth Bank bought Bankwest in October.

The crisis has seen the big four banks - Commonwealth, Westpac, NAB and ANZ - increase their share of the mortgage market from 60 per cent to 90 per cent.

- The fact is if they become too big they present a systemic risk, - Mr Keating said.

He said the Government should have supported BankWest and should not have allowed Westpac to take over St George, warning that the decrease in competition would also have a significant impact on interest rates.

- I would never have agreed as Treasurer to allow St George to go into Westpac because you go from six banks or seven banks to four. And in the end what they'll do is, working on the basis of never give suckers an even break, they'll simply put the margins up. -