IN THE end it was all talk and not much action.

Despite the fanfare of the announcement heralding ”tough new laws” and a ”crackdown” on unfair exit fees, the big winners from the government’s package of banking reforms are, ironically, Australia’s ”big four” banks. Their shares added a combined $3.4 billion in value yesterday following the release of the 13-point plan of the Treasurer, Wayne Swan.

While consumer groups were underwhelmed by the package, investors delivered their unequivocal verdict: this was good for big banks. A rally in Westpac, Commonwealth Bank, NAB and ANZ shares dragged the entire stockmarket higher.

The second tier banks, however, whose fortunes the Swan package was supposed to improve so they could compete with the might of the big four, suffered share price falls. Bendigo Bank, Suncorp and Bank of Queensland shares all closed lower.

Sharemarket analysts were virtually united in the view that the ”reforms” were positive for bank profits: ”No adverse impact on the major banks at all,” said one fund manager.

”A major win for the major banks” was the way stockbroker Credit Suisse described the Treasurer’s funding initiatives.

It was the recommendation for banks to diversify their funding sources to include ”covered bonds” which had analysts excited.

Mr Swan also entrenched taxpayer support for the banks by making the guarantee on deposits permanent. It had been an emergency measure to protect the banking system during the financial meltdown.

The reaction from the sharemarket is likely to embarrass the government. What is good for bank shareholders is usually bad for their customers. Share prices rise on the anticipation of higher profits. Higher profits for banks means higher fees and charges for consumers.