Australia’s
Banking Industry
Australia’s Banking Industry > 3
Date: May 2011
Disclaimer
This publication has been prepared as a general overview of the Banking Industry in Australia and does not constitute and is not intended to constitute financial
product advice as defined under the Corporations Act 2001 (Cwth). Nothing in this document should be construed as a recommendation or statement of opinion
intended to influence a person in making an investment decision.
The information is made available on the strict understanding that the Australian Trade Commission (Austrade) is not providing professional advice. While all care
has been taken in the preparation of this publication, Austrade expressly denies liability for any loss or damage of any nature (including but not limited to any errors
or omissions) arising out of or connected with reliance on the contents of this publication. Any person relying on this publication does so entirely at their own risk.
Austrade strongly recommends that the reader obtain independent professional advice prior to making any investment decision.
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business connected with such products. Investors should always make their own enquiries as to whether an investment is appropriate for their needs and should
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Australia’s Banking Industry > 3
Contents
Executive Summary 5
Australia’s Banking Industry 6
Market Participants 9
Banks 9
Credit Unions 11
Building Societies 12
Non-Deposit-Taking Finance Companies 12
Retail Banking 13
Size and Scope 13
Residential Mortgages 14
Credit Cards 15
Margin Lending 16

Deposits 16
Private Wealth 18
Retirement or Superannuation savings 18
Self-Managed Superannuation Funds 18
Government Reforms ‘Competitive
and Sustainable Banking’ 19
Commercial Banking and Corporate Finance 21
Scope 21
Market Participants 21
Authorised Deposit-taking Institutions 21
Boutique Advisory Firms and Securities Brokers 21
Specialised Finance Companies 21
Commercial Lending 22
Syndicated Debt 25
Project and Infrastructure Finance 26
Trade Finance 28
Corporate Finance and Advisory 30
Mergers and Acquisitions 30
Equity Capital Markets 30
Debt Capital Markets 33
Asset-backed Securities 36
Kangaroo Bonds 37
Over-the-counter and exchange-traded markets 39
Transaction Services – Payments System 40
Operations Processing 40
Regulation and Tax Environment 44
Regulation of the financial system 44
Overview 44
Australian Prudential Regulation Authority 44
Australian Securities and Investments Commission 45

Reserve Bank of Australia 45
Federal Treasury 45
Australian Competition and Consumer Commission 45
Other regulatory agencies 45
Summary of available operating models 46
Overview 46
Australian Credit Licence 46
Available options 46
Summary of requirements for each option 47
The authorisation and application processes 51
Australian financial services licences 52
Introduction 52
What is a financial service? 52
What is a financial product? 52
Retail and wholesale clients 53
Other considerations 53
Privacy laws 53
Anti-money laundering and similar laws 53
New laws to change the way to take security 53
in Australia
Taxation 54
Summary 54
Taxation of business profits 55
Taxation treatment of funding options 55
When is interest withholding tax payable? 55
Exemptions from IWT 55
Notional borrowing by an Australian branch 56
of a foreign bank
Deductibility of IWT 56
Phasing down Australian IWT for financial institutions 56

Special treatment for offshore banking units 57
Thin capitalisation 57
Useful Links 58
Appendix A – Banking Institutions 59
Appendix B – Credit Unions and Building Societies 60
Appendix C – Foreign Retail Banks in Australia 62
Appendix D – International Expansion of 64
Australia’s Largest Banks
Appendix E – Selected Australian Legal and 67
Accounting/Tax Advisors in Financial Services
Appendix F – Infrastructure Australia’s Reform and 68
Investment Priorities
Appendix G – Capital Expenditure in Australia’s 70
Mining Sector
Appendix H – Transaction Services – Payments System 72
Regulation 72
Payments System Access Points 72
Payment Settlements 73
Future Trends 73
Australia’s Banking Industry > 5
Australia ranked fifth amongst the world’s
leading financial systems and capital markets
in the 2010 World Economic Forum Financial
Development report.
Australia’s Banking Industry > 5
Australia has a strong, profitable, sophisticated
and well regulated banking sector which is
welcoming of new entrants and increasingly
engaged in regional and global markets.
The financial sector is the largest contributor to Australia’s national

output, around 11 per cent of Australian output or A$135 billion
of real gross value added in 2010.
1

Australia ranked fifth amongst the world’s leading financial
systems and capital markets in the 2010 World Economic Forum
Financial Development report.
Total assets of Australia’s banks, defined as Authorised Deposit-
taking Institutions (ADIs)
2
, were A$2.7 trillion. Australia has four
large domestic banks (the “four pillars”) that provide full service
retail and commercial lending to the Australian economy;
Australia and New Zealand Bank (ANZ), Commonwealth Bank
of Australia (CBA), National Australia Bank (NAB), and Westpac
Banking Corporation (WBC). Each has a AA rating (Standard &
Poor’s) with only nine of the top 100 banks globally enjoying a
rating of AA or higher.
3

Foreign banks
4
are also well represented in the Australian
market with 20 of Forbes’ top 25 banking institutions having a
presence in Australia. The majority of these foreign competitors
are focused on commercial banking and capital market
activities, although a number are now significant players in the
retail banking market.
Australia’s retail banking sector is relatively concentrated, with
twenty one banks providing the bulk of banking services to

consumers (12 domestic banks, 9 foreign owned subsidiaries).
Consumer lending in Australia totalled A$1.3 trillion as at October
2010, of which the largest component is mortgage lending.
While the major Australian banks have dominant market shares
across most consumer finance lines, there is also increasing
competition from foreign banks and regional Australian banks
and competition from non-bank lenders (credit unions, building
societies and non-deposit-taking specialist finance companies).
Australia’s payments system has undergone, and continues
to undergo, change designed to increase competition and
innovation. Australians are early adopters of new technology,
as reflected in the significant growth in electronic payments,
EFTPOS and ATMs in the country.
The commercial banking and corporate finance and advisory
sector incorporates a full range of services provided to
commercial, corporate, government and institutional sectors.
Specialist expertise exists in mining and resources, infrastructure
and project finance (including public-private partnerships),
agriculture, and property.
Competition in this sector includes the major and regional
domestic banks, foreign banks, securities brokerage
companies, specialised corporate advisory firms, and asset
finance companies.
Australia’s commercial and corporate advisory market comprises:
›
A$620 billion commercial lending market.
›
A sizeable syndicated loans market that has raised
US$336 billion over the five years to 2010, equivalent to
2.1 per cent of world issuance.

›
The second largest project finance market in Asia-Pacific
after India, with US$14.6 billion worth of deals in 2010, or
15 per cent of the region’s total.
›
The second largest free-floating stock market in the
Asia-Pacific region, and sixth largest globally, with a
capitalisation of US$1.1 trillion and 2,072 listed companies.
›
One of the three largest Mergers and Acquisitions markets
in Asia-Pacific, with announced deals totalling US$132
billion in 2010 and US$528 billion for the five years to
2010; 3.5 per cent of globally announced deals.
›
The second largest Equity Capital Market in Asia-Pacific
and fifth largest globally, with US$199 billion of equity
issuance over the five years to 2010.
›
A securitisation market that has resumed growth following
the global financial crisis, with A$19.5 billion in RMBS
issuance in 2010, up from A$9.9 billion in 2008.
›
A fast growing Kangaroo bond market that has increased
from A$9 billion to A$129 billion bonds outstanding over
the ten years to October 2010 – a compound annual
growth rate of 28 per cent.
›
The world’s seventh largest foreign exchange market
with total FX turnover averaging US$192 billion per day in
April 2010. The US$/A$ pair being the world’s fourth most

traded pair after the Euro, Yen and Pound Sterling.
›
The Asia-Pacific’s second largest pension fund industry after
Japan, at US$1,261 billion in 2010 – and, by some measures
the fourth largest globally.
Australia’s banking sector has sought to leverage the country’s
strengths in natural resources, infrastructure, public-private
partnerships, property and related capital market activities.
Foreign banks operating in Australia have also been attracted
by our reputation for product innovation, advanced capital and
risk management systems, our highly skilled workforce and our
proximity to key regional markets. Decisions have also been
influenced by our political stability, strong rule of law, transparent
and highly regarded regulatory environment, advanced
social and economic infrastructure, and enviable lifestyle.
Executive Summary
1. Australian Bureau of Statistics cat no. 5206.0 – Australian National Accounts: National Income, Expenditure and Product, Dec 2010 (released 02 Mar 2011), Table 6, Gross
Value Added by Industry, chain volume measured.
2. ADIs include banks, credit unions and building societies.
3. Ranked by The Banker, “Top 1000 World Banks 2010”, 6 July 2010.
4. Includes foreign banks with locally incorporated subsidiaries, a foreign bank branch licence or representative office.
6 > Australian Trade Commission Australia’s Banking Industry > 7
The financial sector is the largest contributor to Australia’s national output, generating more than 10 per cent of Australian
output or A$135 billion of real gross value added in 2010.
5

As at February 2011, total assets of Australia’s banks,
6
stood at A$2.7 trillion accounting for around 56 per cent of the total
A$4.9 trillion in financial sector assets. This represents a compound annual growth rate (CAGR) of 13 per cent over the

past decade.

Australia ranks 12th in the world in terms of bank assets as rated by The Banker, Top 1000 World Banks, December 2009.
Among 21 countries surveyed by the Asian Bankers 500, Australia has the third largest pool of bank assets in the region after
Japan and China. Australia’s total bank assets accounted for around 240 per cent of the country’s nominal GDP, well above
Japan (193), China (178), South Korea (146), India (102), and the regional average (176).

Australia’s Banking Industry
Australia’s Financial Sector Assets – September 2010 (A$ Billion)
Authorised deposit-taking
Institutions
$2,724b or 55.9%
Securitisation Vehicles
$141.6b or 2.9%
Registered Financial Corporations
$169b or 3.5%
Life offices,
Superannuation Funds
& Other Managed Funds
$1,707b or 35.0%
General Insurance Offices
$134b or 2.7%
Sources: Reserve Bank of Australia, Statistical Table B1, Assets of Financial Institutions (updated 1 Feb 2011); Austrade
5. Australian Bureau of Statistics cat no. 5206.0 – Australian National Accounts: National Income, Expenditure and Product, Dec 2010 (released 02 Mar 2011), Table 6, Gross
Value Added by Industry, chain volume measured.
6. Defined as Authorised Deposit-taking Institutions (ADIs), which includes banks, credit unions and building societies.
Australia’s Banking Industry > 7
Australia’s four major banks are amongst the world’s 100 largest by assets and are four of only nine global banks with a rating of
AA or higher by Standard & Poor’s. Moody’s rating for the four major Australian banks is Aa2, with stable outlook (18 May 2011).


The top Australian banks are also within the top 25 banking institutions as ranked by Forbes in its April 2010 top 2,000 companies.
7. The Banker, “Top 1000 World Banks 2010”, 6 July 2010.
The Asian Banker Top 500 Banks
World’s 100 Largest Banks’ Credit Rating
Rank Country Numbers of Banks Total Assets Regional Market Total Assets % 2009 GDP
in AB500 (US$ Billion) Share % of GDP (US$ Billion)
1 Japan 123 9,779.7 35.51 192.9 5,069
2 China 103 8,853.4 32.14 177.6 4,985
3 Australia 14 2,388.6 8.67 240.2 994
4 India 43 1,258.9 4.57 101.8 1,237
5 Korea 13 1,213.5 4.41 145.8 833
6 Hong Kong 18 1,143.0 4.15 542.8 211
7 Taiwan 35 958.7 3.48 253.3 379
8 Singapore 4 488.5 1.77 268.1 182
9 Malaysia 17 405.2 1.47 210.0 193
10 Thailand 14 273.0 0.99 103.4 264
11 New Zealand 8 230.4 0.84 195.6 118
12 Indonesia 27 214.6 0.78 39.8 539
13 Vietnam 19 97.9 0.36 105.1 93
14 Philippines 15 97.6 0.35 60.5 161
15 Pakistan 15 67.0 0.24 41.4 162
16 Bangladesh 17 26.0 0.09 27.5 95
17 Sri Lanka 6 17.1 0.06 40.5 42
18 Macau 5 14.3 0.05 67.4 21
19 Myanmar 2 12.0 0.04 35.0 34
20 Brunei 1 1.8 0.01 17.3 10
21 Cambodia 1 0.9 0.00 8.3 11
TOTAL 500 27,542.1 100.00 176.2 15,633
Sources: The Asian Banker 500, Issue 101 October 2010; GDP data was sourced from IMF World Economic Outlook October 2010; Macau GDP was sourced from Statistics
and Census Service Macau; Austrade

Sources: This chart was sourced from the Reserve Bank of Australia Financial Stability Report March 2009, page 25, Graph 38, and updated with the 2009 data of banks assets
from The Banker 1000 World Banks 2010 and Standard and Poor’s Credit Ratings (downloaded 27 July 2010) from Bloomberg; Austrade
0
500
1,000
1,500
2,000
2,500
3,000
Australia’s four major banks
Assets US$ Billion (as of 31 December 2009)
AAA AA AA- A+ A A- BBB+ BBB
BBB-
NR
8 > Australian Trade Commission Australia’s Banking Industry > 9
Australia is well positioned as a banking centre in the region, with 20 of Forbes’ top 25 banking institutions having a presence
in Australia.
Australia ranked fifth amongst the world’s 57 leading financial systems and capital markets in the World Economic Forum
Financial Development Report 2010.
In addition to its geographic position in the Asia-Pacific region, close to the world’s fastest growing economies, Australia offers:
›
A sizeable domestic economy – the fourth largest in the Asia-Pacific (after Japan, China and India);
›
A highly skilled and multilingual workforce where 1.4 million Australians speak an Asian language (equivalent to around one-
third of Singapore’s, and one-fifth of Hong Kong’s entire population);
›
Advanced business and IT infrastructure;
›
A sophisticated investor base, including the third largest high-net-worth market in the region (after Japan and China);
›

A stable political and economic environment, and an enviable quality of life;
›
Strong and efficient regulatory environment and legal institutions; and
›
Mature and innovative financial markets including:
›
A leading pension fund market with A$1.3 trillion in funds;
›
The fourth largest pool of investment fund assets globally with A$1.8 trillion FUM;
›
The second largest free-floating stock market in the Asia-Pacific with a market capitalisation of US$1.2 trillion;
›
A fast growing and liquid foreign exchange market having grown 12 per cent CAGR since 1998.
The Forbes World’s Leading Companies
Rank
1
Company Country Sales Profits Assets Market Value
1 JPMorgan Chase USA 115.6 11.7 2,032.0 166.2
3 Bank of America USA 150.5 6.3 2,223.3 167.6
5 ICBC China 71.9 16.3 1,428.5 242.2
6 Banco Santander Spain 109.6 12.3 1,438.7 107.1
7 Wells Fargo USA 98.6 12.3 1,243.7 141.7
8 HSBC Holdings UK 103.7 5.8 2,355.8 178.3
11 BNP Paribas France 101.1 8.4 2,952.2 86.7
17 China Construction Bank China 59.2 13.6 1,106.2 184.3
21 Barclays UK 65.9 15.2 2,223.0 56.2
22 Bank of China China 52.2 9.5 1,016.3 147.0
29 Lloyds Banking Group UK 106.7 4.6 1,650.8 50.3
34 UniCredit Group Italy 92.2 5.6 1,438.9 44.0
43 Deutsche Bank Germany 63.0 6.9 2,150.6 39.8

44 Credit Suisse Switzerland 50.3 6.1 988.9 53.9
48 BBVA-Banco Bilbao Vizcaya Spain 49.3 6.0 760.4 48.2
51 Banco Bradesco Brazil 59.1 4.6 281.4 54.5
52 Banco do Brasil Brazil 56.1 5.8 406.5 42.8
53 Royal Bank of Canada Canada 35.4 3.6 608.1 78.2
54 Intesa Sanpaolo Italy 50.7 3.6 877.7 44.7
59 Commonwealth Bank Australia 31.8 3.8 500.2 75.1
67 Westpac Banking Group Australia 31.2 3.0 519.0 71.0
73 Crédit Agricole France 92.0 1.6 2,227.2 34.4
79 National Australia Bank Australia 32.5 2.3 574.4 48.8
83 ANZ Banking Australia 26.9 2.6 420.5 53.7
86 Toronto-Dominion Bank Canada 23.6 2.9 517.3 55.4
1. Forbes’ rank according to an equal weighting of sales, profits, assets and market value.
Sources: Forbes, The World’s Leading Companies, April 2010; Austrade
(US$ Billion)
Australia’s Banking Industry > 9
Banks, credit unions and building societies – known as Authorised Deposit-taking Institutions (ADIs)
– provide the bulk of banking services to Australian households, businesses and governments – and
are prudentially regulated by the Australian Prudential Regulation Authority (APRA). Non-deposit
taking finance companies also provide competition in selected consumer credit products.
Banks
Australia has a sound, well capitalised banking sector. Its banks are large by global standards, with a strong retail base, highly
developed wealth management capabilities, and full service commercial, trade finance and corporate advisory operations
reaching out into the region.
There are 56 banks operating in Australia (12 domestic banks, 9 foreign subsidiary banks and 35 foreign branch banks) with
total resident assets of A$2.4 trillion as 30 September 2010.
8

Australia’s banking sector offers opportunities for new entrants providing innovative products and distribution systems.
Australian banks are increasingly looking to export their expertise in retail banking, funds management, private banking and

distribution to the region.
The four major domestic banks have the largest market shares in the retail and commercial banking sectors: the Australia and
New Zealand Banking Group (ANZ), Commonwealth Bank of Australia (CBA), National Australia Bank (NAB) and Westpac
Banking Corporation (WBC). They accounted for 77.4
9
per cent of resident assets (A$2.4 trillion) as at September 2010.
Other domestic banks accounted for 9.2 per cent, while foreign bank subsidiaries and branches accounted for 13.4 per cent.
The largest of the other domestic retail bank competitors are Suncorp-Metway, Macquarie Bank, Bendigo Adelaide Bank and
Bank of Queensland.
Of the foreign banks with a subsidiary or branch licence, ING, Bank of Scotland, Citigroup, Deutsche Bank and HSBC have the
largest presence as measured by Australian banking assets. ING now ranks fifth in retail banking with its innovative, internet
based model. Rabobank has built a strong regional footprint drawing on its rural heritage and is now looking to widen its scale
of operations. In addition, there are a number of smaller foreign retail banking operations that target specific immigrant groups
including the Arab Bank, Bank of China, Bank of Cyprus and Beirut Hellenic Bank.
Market Participants
8. APRA, Monthly Banking Statistics, September 2010 (issued 29 Oct 2010).
9. Includes Bank of Western Australia Ltd (wholly owned subsidiary of the Commonwealth Bank).
10 > Australian Trade Commission Australia’s Banking Industry > 11
Assets on Australian Books of Individual Banks (A$ Million)
1. BankWest (Bank of Western Australia) is a wholly owned subsidiary of the Commonwealth Bank of Australia.
Sources: Australian Prudential Regulation Authority, Monthly Banking Statistics, September 2010 (issued 29 October 2010), Table 1; Austrade
September 2010 Resident Assets
Westpac Banking Corporation 528,148
Commonwealth Bank of Australia 515,805
National Australia Bank Ltd 407,793
Australia and New Zealand Banking Group Ltd 360,592
Four Major Domestic Banks 1,812,338
Bank of Western Australia Ltd
1
70,877

Suncorp-Metway Ltd 70,813
Macquarie Bank Ltd 60,560
Bendigo and Adelaide Bank Ltd 41,306
Bank of Queensland Ltd 32,901
AMP Bank Ltd 7,746
Members Equity Bank Pty Ltd 6,255
Rural Bank Ltd 4,126
Total Other Domestic Banks 294,584
ING Bank (Australia) Ltd 46,572
Citigroup Pty Ltd 22,449
HSBC Bank Australia Ltd 17,917
Rabobank Australia Ltd 11,819
Investec Bank (Australia) Ltd 4,580
Bank of Cyprus Australia Ltd 1,483
Arab Bank Australia Ltd 1,363
Beirut Hellenic Bank Ltd 950
Bank of China (Australia) Ltd 472
Total Foreign-owned Bank Subsidiaries 107,605
Bank of Scotland plc 25,211
Citibank, N.A. 22,402
Deutsche Bank Aktiengessellschaft 20,819
UBS AG 16,617
JPMorgan Chase Bank, National Association 15,057
BNP Paribas 14,452
Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A. 13,046
The Royal Bank of Scotland Plc 11,828
The Bank of Tokyo-Mitsubishi UFJ, Ltd 8,684
The Hongkong and Shanghai Banking Corporation Ltd 8,368
Top 10 Foreign-owned Bank Branches 156,484
Other Foreign-owned Bank Branches 62,878

Total Foreign-owned Bank Branches 219,362
TOTAL 2,433,889
Australia’s Banking Industry > 11
Credit Unions
Credit unions operate predominately in the ‘retail’ sector with business driven by deposit taking, consumer credit and housing
loan finance. There is also a small proportion of commercially focussed business targeted at small and medium-sized
enterprises (SMEs).
10
Many credit unions also distribute products in areas such as health insurance, travel and managed funds
as a means of providing greater member value.
Australia’s 107 credit unions had total assets as at September 2010 of A$50.6 billion, which represented an increase of 8 per
cent over the year.
11
This growth was driven predominantly by housing loans, which account for A$33.9 billion (up more than
8.5 per cent over the same period).
There are approximately 900 credit union branches around Australia, although New South Wales is home to the bulk of these
with 43.3 per cent of all branches. Queensland accounts for the second largest number, with 17 per cent of credit union
branches, followed by Victoria with 15.7 per cent.
12

The level of concentration in the credit union sector is significant, with the top five credit unions – Credit Union Australia
Limited, Australian Central Credit Union, Savings & Loans Credit Union (SA) Limited, Police and Nurses’ Credit Society, and
NSW Teacher’s Credit Union – holding an estimated 42.5 per cent of market share in terms of total industry revenue and 41.8
per cent of total industry assets.
13

The credit union sector is going through a period of consolidation and has seen a number of mergers and acquisitions over
the last five years, driven by the need to achieve further cost savings through economies of scale. The sector has a diverse
range of small and large organisations with the largest credit union having in excess of 400,000 members and around
A$7.5 billion in assets.

Top 5 Credit Unions Market Share Assets 2008-09
(% of Revenue) (A$ Million)
Credit Union Australia Ltd 19.0 7,690
Australian Central Credit Union Ltd 7.0 2,595
Savings & Loans Credit Union (SA) Ltd 7.0 3,230
Police and Nurses’ Credit Society 5.0 2,403
NSW Teachers’ Credit Union 4.5 2,893
Sources: Annual Reports, IBISWorld Industry Report K7323, Credit Unions in Australia, November 2010, page 23
A list of Australian authorised credit unions as at August 2010 is provided in Appendix B. More information on this sector is
available through ABACUS, the peak body representing mutual financial institutions, at www.abacus.org.au.
10. IBISWorld estimates that approximately 4 per cent of Credit Union business is with the commercial sector. IBISWorld Industry Report K7323, Credit Unions in Australia,
November 2010.
11. APRA, Quarterly Credit Union and Building Society Performance, September 2010 (issued 30 November 2010).
12. IBISWorld Industry Report K7323, Credit Unions in Australia, August 2010, page 16.
13. Ibid, page 23.
12 > Australian Trade Commission Australia’s Banking Industry > 13
Building Societies
Australia’s 11 building societies had total assets as at September 2010 of A$24.6 billion, which represented an increase of 8.7
per cent over the year.
14
This growth was driven predominantly by housing loans, which account for A$16.5 billion (up 9.9 per
cent over the same period).
Similarly to credit unions, the bulk of building society business is in the retail sector, with less than 10 per cent of their activities
estimated to be in the commercial sector.
15

Building societies tend to target their financing in niche and rural markets that are not adequately covered by the banks.
16

They are predominantly located in NSW and Queensland, which are home to an estimated 86 per cent of the industry’s

establishments.
The level of concentration in the building society sector is high, with the top four having around 80 per cent of industry revenue
and over 95 per cent of industry assets.
17

Top 4 Building Societies Market Share Assets 2008-09
(% of Revenue) (A$ Million)
Heritage Building Society Limited 25.0 7,114
Newcastle Permanent Building Society 22.0 6,303
Illawarra Mutual Building (IMB) Society 17.0 4,444
Greater Building Society 15.4 4,106
Source: Annual Reports, IBISWorld Industry Report K7322, Building Societies in Australia, August 2010, page 21
A list of Australian authorised building societies as at August 2010 is provided in Appendix B. More information on this sector is
available through ABACUS, the peak body representing mutual financial institutions, at www.abacus.org.au.
Non-Deposit-Taking Finance Companies
Non-deposit-taking finance companies represent another significant group of institutions that service the retail banking sector
in Australia. These institutions do not take deposits but have traditionally provided strong competition in consumer lending,
such as mortgage lending, credit cards, and asset or lease financing (i.e., motor vehicles, computers, furniture).
Examples of non-deposit-taking finance companies in Australia include GE Money, Liberty Financial, Resi, La Trobe Financial
Services, AIMS Financial Group, Assured Home Loans, Rate Busters and Home Star.
As these institutions do not take deposits, they are not required to hold a banking license. However, once they reach a certain
size (total assets exceeding A$5 million), they are generally required to register as a registered finance corporation, for the
purposes of the
Financial Sector (Collection of Data) Act, 2001
. Further information, including a list of registered financial
corporations, is available from the APRA website at
More information on this sector is available through the Australian Finance Conference at www.afc.asn.au, and the Australian
Equipment Lessors Association, at www.aela.asn.au.

14. APRA, Quarterly Credit Union and Building Society Performance, September 2010 (issued 30 November 2010).

15. IBISWorld Industry Report K7322, Building Societies in Australia, August 2010.
16. IBISWorld Industry Report K7322, Building Societies in Australia, August 2010.
17. Ibid.
18. APRA website at www.apra.gov.au/ADI/ADIList.cfm#AOBC
Australia’s Banking Industry > 13
Size and Scope
Consumer lending in Australia has continued to grow rapidly over the past decade, at a compound annual growth rate (CAGR)
of 12.6 per cent – although in more recent years this growth rate has slowed to single digits. As at October 2010, total housing
and other personal credit from Australia’s financial intermediaries reached A$1.3 trillion. House lending for owner occupiers and
investors accounted for 89 per cent of total consumer credit outstanding.

Banks provide the majority of credit to Australian households with a market share of 83 per cent, representing almost
A$1.1 trillion as at September 2010. Banks providing deposit-taking services to the household sector are required to be locally
incorporated and are prudentially regulated by APRA. There are 12 domestic banks and nine foreign bank subsidiaries in
Australia – see Appendix A for full list of banks.
The table following provides an overview of household loans held by banks as at 30 September 2010. Consumer lending in
Australia, defined as loans and advances to households, accounted for 70 per cent of total bank loans and advances. The four
major banks accounted for 87 per cent of all household loans, while the other domestic banks accounted for 7.6 per cent, and
foreign bank subsidiaries held 5.4 per cent.

Retail Banking
Australia’s Consumer Credit (Incl. Securitisation) – Year End, A$ Billion
0
200
400
600
800
1,000
1,200
1,400

Mortgage – Owner-occupier (13.5%)
Mortgage – Investor (13.4%)
Other personal (7.2%)
A$ Billion
Ye ar End
Oct-2000 Dec-2001Dec-2000 Dec-2002 Dec-2003 Dec-2004 Dec-2005 Dec-2006 Dec-2007 Dec-2008 Dec-2009 Oct-2010
Note: The number in the brackets represents compound annual growth rate since 2000.
Sources: Reserve Bank of Australia, Statistical Table D2 Lending and Credit Aggregates (Last updated 30 Nov 2010); Austrade
14 > Australian Trade Commission Australia’s Banking Industry > 15
Residential Mortgages
The residential mortgage market in Australia is by far the largest category of loans to households, representing 90 per cent
of all bank lending to the household sector. Since 2000, bank mortgage loans for owner-occupied and investment properties
have increased much faster (13.5 per cent p.a) than other consumer credit (7.2 per cent p.a.).
Australian laws place full recourse lending to residential mortgages in Australia at a national level. This has provided
homogeneity across the national mortgage market and places greater responsibility for the loan on the borrower than has
been the case in some overseas jurisdictions.
Australia’s market is characterised by high levels of Lender’s Mortgage Insurance. This is an additional charge, borne by the
lender and often passed on to the borrower, which serves to meet any shortfall arising between the proceeds from foreclosure
on the collateral (e.g., residential property) and the loan amount. Typically, lenders require such insurance where the borrowers’
loan to valuation ratio exceeds 80 per cent.
Tax laws are favourable towards residential property ownership, with capital gains tax exempt for owner occupiers and
discounts of up to 50 per cent available for investors who own for periods greater than 12 months.
19
Investors can also offset
the interest expenses and property costs against their income, including other income sources. If their property expenses
exceed their property income, these expenses can be ‘negatively geared’ against other personal income sources.
Loans and Advances to Household on Australian Books of Individual Banks (A$ Million)
Housing: Housing: Credit
September 2010 Owner-occupied Investment Cards Other Total
Westpac Banking Corporation 184,755 82,190 9,397 15,403 291,745

Commonwealth Bank of Australia 169,375 79,166 8,566 9,754 266,861
National Australia Bank Limited 101,098 49,607 5,101 17,900 173,706
Australia and New Zealand Banking Group Ltd 107,614 41,207 7,965 13,806 170,592
Four Major Domestic Banks 562,842 252,170 31,029 56,863 902,904
Bank of Western Australia Ltd
1
29,993 8,199 1,260 569 40,021
Suncorp-Metway Ltd 18,304 8,099 6 670 27,079
Bendigo and Adelaide Bank Ltd 12,028 6,792 267 2,516 21,603
Bank of Queensland Ltd 9,455 7,862 – 315 17,632
Macquarie Bank Ltd 1,167 585 359 4,520 6,631
AMP Bank Ltd 3,830 1,418 – 417 5,665
Members Equity Bank Pty Ltd 2,978 769 137 144 4,028
Total Other Domestic Banks 77,755 33,724 2,029 9,151 122,659
ING Bank (Australia) Ltd 27,458 9,240 – – 36,698
Citigroup Pty Ltd 4,785 2,442 4,586 1,133 12,946
HSBC Bank Australia Ltd 2,910 3,199 991 162 7,262
Arab Bank Australia Ltd 126 116 – 143 385
Bank of China (Australia) Ltd 208 141 – 8 357
Bank of Cyprus Australia Ltd 167 46 – 141 354
Beirut Hellenic Bank Ltd 122 222 – 1 345
Rabobank Australia Ltd 189 23 – – 212
Investec Bank (Australia) Ltd 16 – – – 16
Total Foreign-owned Bank Subsidiaries 35,981 15,429 5,577 1,588 58,575
TOTAL 676,593 301,341 38,635 67,653 1,084,222
1. BankWest (Bank of Western Australia) is a wholly owned subsidiary of the Commonwealth Bank of Australia.
Sources: Australian Prudential Regulation Authority, Monthly Banking Statistics, September 2010 (issued 29 October 2010), Table 2; Austrade

Households
19. Australian Taxation Office /> Australia’s Banking Industry > 15

In July 2010, regulatory oversight for consumer credit protection laws was transferred from the state governments to the
federal government under the
National Consumer Credit Protection Act 2009
. The Act largely replicates the previous state-
based Uniform Consumer Credit Code (UCCC). These laws are designed to protect Australian consumers from predatory
or unscrupulous lending practices. The emphasis is placed on the provider to ensure that the borrower has the capacity to
borrow, is properly informed of their responsibilities and that loans are not written in an unfair or misleading manner. Under
these laws, the provider is to access the borrower’s capacity to repay; all the repayments, fees and charges associated with
the credit provided (including a change in repayments due to the ending of a ‘honeymoon’ interest rate period). For further
information see Regulatory and Tax Environment section.
Credit Cards
The credit card market in Australia has grown steadily over the past decade in terms of number of accounts, transactions and
balances outstanding. As at October 2010, there were 14.7 million credit card accounts in Australia, the equivalent of 87 per
cent of Australia’s adult population, with a total balance outstanding of A$48 billion.
20
The average outstanding balance is
around A$3,200.

Credit cards are provided by domestic and foreign banks, credit unions, building societies and some specialised credit card
providers. In recent years, some banks have provided white labelling services to other mass market channels such as retailers
and airlines. Many of Australia’s largest retailers, such as Coles, David Jones, Harvey Norman, Myer and Woolworths have
credit card offers.
Within the banks, the four major banks account for 83.6 per cent
21
of total bank credit card loans outstanding, while other
domestic banks account for 1.6 per cent, and foreign banks, 14.4 per cent.
22
The foreign bank share of the credit card market
is dominated by two institutions, Citigroup and HSBC, with Citigroup having the bulk of credit card loans outstanding (around
12 per cent market share), the fifth largest provider after the major domestic banks.

20. Reserve Bank of Australia, Statistical Table C1, Credit and Charge Card Statistics as at October 2010.
21. Includes Bank of Western Australia Ltd (wholly owned subsidiary of the Commonwealth Bank).
22. Australian Prudential Regulation Authority, Monthly Banking Statistics, September 2010 (issued 29 October 2010), Table 2.
Australia’s Credit and Charge Card Statistics (Values and Number, Not Seasonally Adjusted)
0
10,000
20,000
30,000
40,000
50,000
60,000
0
2
4
6
8
10
12
14
16
Number of Accounts ('000, RHS)
A$ Million
Number, ‘millions
Mar-2000
Sep-2000
Mar-2001
Sep-2001
Mar-2002
Sep-2002
Mar-2003

Sep-2003
Mar-2004
Sep-2004
Mar-2005
Sep-2005
Mar-2006
Sep-2006
Mar-2007
Sep-2007
Mar-2008
Sep-2008
Mar-2009
Sep-2009
Mar-20010
Sep-20010
Balances Outstanding (A$ Million, LHS)
Sources: Reserve Bank of Australia, Statistical Table C1 Credit and Charge Card Statistics (Last updated 30 Nov 2010); Austrade
16 > Australian Trade Commission Australia’s Banking Industry > 17
Margin Lending
Margin lending has developed as another consumer credit product over the past two decades. Margin lending is borrowing to
invest in financial securities – typically listed shares or managed funds. Each individual security can be leveraged up to a set
loan to value ratio (LVR). If the securities’ move outside of the allowed valuation limit, borrowers are issued a ‘margin call’ that
requires them to either add cash to their margin account or to sell down existing securities to bring the loan back under the
LVR limit.
Over the ten years to September 2010, balances outstanding on margin loans grew at 10 per cent (CAGR) to A$17.8 billion.
Growth was rapid during the seven years to 2007, but reduced following the global financial crisis. Today, there are 205,000
client accounts. Quarterly statistics published by the Reserve Bank of Australia indicate that the average loan to security
valuation is 37.5 per cent, with a mean loan size of A$91,000.

Deposits

As at September 2010, total deposits
23
(retail and corporate/wholesale) held by banks, credit unions and building societies
were A$1,485 billion, significantly up from A$780 billion five years ago. This represents a compound annual growth rate of
13.7 per cent since September 2005. Banks account for 95 per cent of these deposits.
The following table provides an overview of household deposits held by banks
24
as at 30 September 2010. Deposits sourced
from households amounted to $477.8 billion and accounted for 37 per cent of total bank deposits, with the remainder sourced
from businesses, governments and institutions. The four major banks accounted for 78.7
25
per cent of all deposits, while the
other domestic banks accounted for 10.4 per cent and foreign banks
26
11.0 per cent.

Australia’s Margin Lending (September each year)
0
5
10
15
20
25
30
35
40
0
50,000
10 0,000
150,000

200,000
250,000
Number of Accounts
Margin Lending Credit Outstanding (A$ Billion)
2000 20022001 2003 200420052006200720082009 2010
Sources: Reserve Bank of Australia, Statistical Table D10; Austrade
23. Reserve Bank of Australia, statistical tables B3, B7 and B8.
24. The domestic books of a bank has the following scope: includes operations/transactions booked or recorded inside Australia; does not consolidate Australian or offshore
controlled entities; includes transactions of Australian-based offshore banking units; excludes transactions of overseas-based offshore banking units; excludes offshore
branches; and excludes transactions, assets and liabilities with offshore.
25. Includes Bank of Western Australia Ltd (wholly owned subsidiary of the Commonwealth Bank).
26. Includes foreign owned subsidiary and foreign branch licenced banks.
Australia’s Banking Industry > 17
Deposits on Australian Books of Individual Banks (A$ Million)
1. BankWest (Bank of Western Australia) is a wholly owned subsidiary of the Commonwealth Bank of Australia.
Sources: Australian Prudential Regulation Authority, Monthly Banking Statistics, September 2010 (issued 29 October 2010), Table 4; Austrade

September 2010 Households Total Deposits
Commonwealth Bank of Australia 130,008 288,559
Westpac Banking Corporation 113,058 276,907
National Australia Bank Ltd 64,865 216,748
Australia and New Zealand Banking Group Ltd 66,840 194,527
Four Major Domestic Banks 374,771 976,741
Bank of Western Australia Ltd
1
14,349 42,622
Bendigo and Adelaide Bank Ltd 17,265 33,417
Suncorp-Metway Ltd 14,680 32,390
Macquarie Bank Ltd 7,015 29,929
Bank of Queensland Ltd 14,896 27,232

Members Equity Bank Pty Ltd 1,271 4,186
Rural Bank Ltd 1,320 3,485
AMP Bank Ltd 1,254 3,524
Total Other Domestic Banks 72,050 176,785
ING Bank (Australia) Ltd 17,095 27,624
HSBC Bank Australia Ltd 3,876 12,146
Citigroup Pty Ltd 6,256 7,670
Rabobank Australia Ltd 1,830 4,966
Investec Bank (Australia) Ltd 242 2,370
Arab Bank Australia Ltd 377 1,170
Bank of Cyprus Australia Ltd 459 980
Beirut Hellenic Bank Ltd 491 780
Bank of China (Australia) Ltd 309 311
Total Foreign-owned Bank Subsidiaries 30,935 58,017
BNP Paribas - 12,778
Citibank, N.A. - 6,766
Deutsche Bank Aktiengessellschaft - 6,608
Bank of Scotland plc - 5,586
The Royal Bank of Scotland Plc - 4,426
The Bank of Tokyo-Mitsubishi UFJ, Ltd - 3,794
Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A. - 3,541
Sumitomo Mitsui Banking Corporation - 3,440
The Northern Trust Company - 3,095
Mizuho Corporate Bank, Ltd - 2,696
Top 10 Foreign-owned Bank Branches 0 52,730
Other Foreign-owned Bank Branches 59 31,247
Total Foreign-owned Bank Branches 59 83,977
TOTAL 477,815 1,295,518
18 > Australian Trade Commission Australia’s Banking Industry > 19
Private Wealth

Private wealth is a key driver of retail deposit demand. Australia’s private wealth market now ranks among the largest and
fastest growing in the world. Since 1990, Australia’s total private sector wealth (including consumer durables, dwellings,
deposits, shares and other equities, and reserves of life offices and pension funds) grew by 8.3 per cent per annum to
A$6.7 trillion.
27

Australia was the third largest high net worth individual (HNWI) market in the Asia-Pacific region and the 10th largest in the
world in 2009.
28
The number of HNWI in Australia, defined as persons with greater than US$1 million in investable assets,
grew 34.4 per cent to reach 173,600, as at December 2009. Australia had almost 6 per cent of the region’s HNWI population,
accounting for 5.4 per cent of the region’s total wealth, with a combined value of US$519 billion.
See Austrade’s publication on the Private Banking Industry in Australia
/>Retirement or Superannuation savings
In addition to voluntary savings, Australia has a mandatory retirement or superannuation savings regime which requires
9 per cent of income to be deposited in superannuation accounts which, generally speaking, can only be accessed their
preservation age. Recently, the Government foreshadowed its intention to introduce legislation to gradually increase the
compulsory level of superannuation savings to 12 per cent by 2019-20.
29
The pool of investment fund assets (including mandatory pension, self-managed superannuation and other investment
assets) stands at A$1.8 trillion, which by some measures is the fourth largest pool of savings globally.
30
The majority of these
superannuation savings are managed by trustees of APRA-regulated superannuation funds and invested at arms-length by
professional investment managers.
See Austrade’s publication on the Investment Management Industry in Australia
/>Self-Managed Superannuation Funds
Self-Managed Superannuation Funds (SMSFs) are a superannuation fund managed by the members themselves as trustees
of the fund. Each SMSF can have up to four members, where all members are required to be trustees. Statistics released by the
Australian Prudential Regulation Authority in December 2010 show that the number of SMSFs grew from 412,560 to 439,397 over

the past 12 months. SMSFs now hold A$420.6 billion, or 32 per cent of the nation’s A$1.3 trillion superannuation pool.
The latest Multiport SMSF Investment Patterns Survey October 2010 revealed that SMSF members allocated 21.8 per cent of
their assets to cash and short-term deposits in September 2010.

27. Private wealth is defined as the sum of household dwellings, household consumer durables (including market values of motor vehicles, furnishings and other household
equipment), and household and unincorporated enterprises’ financial assets (including deposits, assets of life offices, superannuation funds and friendly societies, shares
and other equity, unfunded superannuation claims and all other). Data sourced from Reserve Bank of Australia, Statistical Table B20.
28. Merrill Lynch Capgemini, World Wealth Report 2010 and Asia-Pacific Wealth Report 2010. See also Austrade’s data alert />ArticleDocuments/2792/Data-Alert-101013-Asia-Pacific-Wealth-Report.pdf.aspx
29. See the Australian Governments ‘A tax plan for our future’
30. See Austrade’s publication ‘Investment Management Industry in Australia’ />Australia.pdf.aspx
Australia’s Banking Industry > 19
Government Reforms: ‘Competitive and Sustainable Banking’
In December 2010, the Australian Government announced three broad streams of reform across the Australian banking
system, titled ‘Competitive and Sustainable Banking System’.
›
Stream One: Empower consumers to get a better deal.
›
Stream Two: Support smaller lenders to compete with big banks.
›
Stream Three: Secure the long-term safety and sustainability of our financial system.
These reforms are aimed at boosting consumer flexibility to transfer deposits and mortgages; banning exit fees on new
home loans; empowering the Australian Competition and Consumer Commission (ACCC) to prosecute anti-competitive price
signalling; and a community awareness and education campaign.
The Government will also introduce a new official ‘Government Protected Deposits’ symbol for ADIs, regulated by APRA, to
help consumers identify that their deposits, up to a certain cap, have the protection of the Financial Claims Scheme (FCS) in
the unlikely event that the entity is wound up. The FCS, which was introduced in October 2008, is to be made a permanent
feature of the Australian financial architecture and the Government has been working with the Council of Financial Regulators
to determine an appropriate cap to apply from October 2011 onwards. The current cap is A$1 million per depositor per ADI.
Funding sources will be supported through additional Government investments in high quality AAA-rated Residential Mortgage
Backed Securities (RMBS). This is a further A$4 billion investment, taking the total Government support to RMBS since the

financial crisis to A$20 billion. The Government has tasked the Treasury to design bullet RMBS structures and will amend the
Banking Act 1959
to allow Australian banks, credit unions and building societies to issue covered bonds.
Full details of the Government’s announced banking reforms are available from the Treasury website:


Superannuation Industry in Australia
Jun 2009 Jun 2010 Jun 2009 Jun 2010
By fund type
Corporate 54.0 56.2 190 168
Industry 191.8 225.5 67 65
Public Sector 153.0 175.3 40 39
Retail 304.7 339.0 166 154
Sub Total 703.5 795.9 463 426
Pooled Superannuation Trusts 69.7 79.1 82 79
Small APRA funds 2.0 1.6 4,277 3,869
Single-member ADFs 0.1 0.0 112 103
Self-managed Super Funds
a
334.2 390.8 401,929 428,198
Balance of Life Office Statutory Funds 35.5 38.9 – –
TOTAL
B
1,075.3 1,227.2 406,863 432,675
a. Estimated data on self-managed superannuation funds are provided by the Australian Taxation Office (ATO).
b. Total assets does not include pooled superannuation trusts.
Sources: Australian Prudential Regulation Authority Statistics, Quarterly Superannuation Performance, June 2010 (issued 9 September 2010); Austrade

Assets (A$ Billion) Number of Entities
Australia’s Banking Industry > 21

Australia’s Banking Industry > 21
Scope
Services to the commercial sector can be segregated into a number of core markets:
31

›
Commercial Lending – Intermediated lending to SMEs, large corporates, institutions and government;
›
Corporate Finance and Advisory:
›
Mergers and Acquisitions – M&A, demergers and other advisory;
›
Equity Capital Markets – Initial public offerings (IPOs), secondary raisings, underwriting; and
›
Debt Capital Markets – corporate, government and institutional bonds, structured finance – securitisation, syndicated
loans and project finance.
Australia’s commercial and corporate advisory sectors are known for specialised expertise in particular industries including
energy, mining and resources, infrastructure and project finance, agriculture, and real estate.
Market Participants
Authorised Deposit-taking Institutions
There are 56 banks licensed to service wholesale clients in Australia and a further 16 banks with representative offices. Nine
foreign banks operate with a subsidiary license, and a further 35 as a foreign bank branch. In addition, there is a growing
number of emerging market banks that have entered Australia, particularly from China and India, primarily focused on servicing
their corporate clients in Australia, as well as Australian companies interested in entering their markets. A list of authorised
banking institutions in Australia is provided in Appendix A.
32

There has been a re-alignment of foreign bank operations in Australia following the global financial crisis – changes in Australia
largely reflect outcomes of parent banks. Leading houses such as Citibank, Deutsche Bank, HSBC, JPMorgan, Royal Bank of
Scotland, UBS, and others have a substantial commercial banking presence here.

Boutique Advisory Firms and Securities Brokers
Corporate advisory firms and small specialist finance companies provide competition in niche areas such as mergers and
acquisitions advisory. Included in this category are the larger accounting firms that have a corporate advisory arm, as well
as a range of smaller specialist boutique firms, including: Moelis & Company, Palladio Partners, Gresham Partners, Caliburn
Partnership and BKK Partners. Securities brokers or stockbrokers are generally categorised as either institutional or retail. Many
of these firms provide auxiliary services in capital market financing.
Specialised Finance Companies
As in the consumer lending area, non-deposit-taking specialised finance companies provide an alternative source of financing
for corporations and institutions. Such institutions include asset finance and leasing companies, vendor finance companies,
factoring or inventory finance companies and specialised trade finance companies.
This sector was significantly affected by the financial crisis due to its dependence on wholesale markets and securitisation to
fund its activities. In addition, the Australian operations of a number of foreign owned institutions were hit hard by effects in
their home markets.
Commercial Banking and Corporate Finance
31. Many foreign banks providing commercial banking and corporate advisory services are also active in investment and asset management.
This sector is covered in Austrade’s
Investment Management Industry in Australia
publication, 2010.
/>32. Source: APRA website at /> 22 > Australian Trade Commission Australia’s Banking Industry > 23
Australia’s Bank Commercial Lending – Finance and Non-Finance
(Year End, A$ Billion, Excluding Securitisation)
33. Reserve Bank of Australia, Statistical Table D2, Lending and Credit Aggregates (last updated 30 November 2010).
34. Includes Bank of Western Australia, a wholly owned subsidiary of the Commonwealth Bank of Australia.
35. APRA, Monthly Banking Statistics, May 2010 (issued 30 June 2010).
Commercial Lending
The level of total business loans outstanding from Australia’s financial institutions was in excess of A$620 billion as at October
2010.
33
Commercial Lending credit to the non-financial sector grew at a CAGR of 11.1 per cent over the ten years to October
2010, with lending to the financial sector growing at 18.8 per cent CAGR over the same period. Lending grew more rapidly in

the early part of the decade and in 2007 and 2008 there was a market shift to intermediated lending as debt capital markets
became more difficult to access. Since 2008, commercial lending has been in decline, subtracting 6.6 per cent in 2009
and 2.4 per cent in 2010. Coinciding with this, equity capital markets saw a rise in secondary market issuance, with many
companies choosing to increase the proportion of their capital funded from equity (see Equity Capital markets section).

The major domestic banks provide the bulk of commercial intermediated lending in Australia, which includes loans to
large corporates, financial institutions, government organisations and SMEs. Regional banks, credit unions and building
societies provide some additional competition in the smaller enterprise sector and niche areas such as rural and agricultural
organisations. Similarly, leasing companies and other non-deposit taking finance companies provide specialised lending.
As at February 2011, the major domestic banks account for 72 per cent
34
of bank loans to non-financial corporations, while the
other domestic banks account for 9 per cent and foreign banks 19 per cent. Suncorp-Metway and Bendigo Adelaide Bank are
the most significant competitors in the regional domestic banks, while the largest foreign bank competitors in non-financial
commercial lending are Rabobank, Bank of Tokyo-Mitsubishi, ING and BNP Paribas.
35


Note: The number in the brackets of the legends represents the compound annual growth rate since 2000.
Sources: Reserve Bank of Australia, Statistical Table D5 Lending and Credit Aggregates (Last updated 30 Nov 2010); Austrade
0
10 0
200
300
400
500
600
700
800
Non-financial sector (11.1%)

Financial intermediaries (18.8%)
A$ Billion
Ye ar End
Dec-2001Dec-2000 Dec-2002 Dec-2003 Dec-2004 Dec-2005 Dec-2006 Dec-2007 Dec-2008 Dec-2 009 Oct-2010
Australia’s Banking Industry > 23
Loans and Advances to Corporations on Australian Books of Individual Banks (A$ Million)
1. BankWest (Bank of Western Australia) is a wholly owned subsidiary of the Commonwealth Bank of Australia.
Sources: Australian Prudential Regulation Authority, Monthly Banking Statistics, September 2010 (issued 29 October 2010), Table 2; Austrade
September 2010 Non-financial Corporations Financial Corporations Total
National Australia Bank Ltd 92,370 9,936 102,306
Australia and New Zealand Banking Group Ltd 71,747 7,410 79,157
Westpac Banking Corporation 63,476 10,668 74,144
Commonwealth Bank of Australia 56,673 12,674 69,347
Four Major Domestic Banks 284,265 40,689 324,954
Bank of Western Australia Ltd
1
23,313 698 24,011
Suncorp-Metway Ltd 17,360 397 17,757
Bendigo and Adelaide Bank Ltd 7,933 76 8,009
Macquarie Bank Ltd 4,147 1,253 5,400
Bank of Queensland Ltd 5,297 0 5,297
Rural Bank Limited 3,572 0 3,572
AMP Bank Limited 583 5 587
Members Equity Bank Pty Ltd 51 19 70
Total Other Domestic Banks 62,256 2,448 64,703
Rabobank Australia Ltd 11,001 0 11,001
ING Bank (Australia) Ltd 3,287 0 3,287
HSBC Bank Australia Ltd 3,097 99 3,197
Investec Bank (Australia) Ltd 2,357 0 2,357
Bank of Cyprus Australia Ltd 842 0 842

Arab Bank Australia Ltd 526 63 589
Beirut Hellenic Bank Ltd 405 0 405
Citigroup Pty Ltd 31 131 162
Bank of China (Australia) Ltd 0 0 0
Total Foreign-owned Bank Subsidiaries 21,547 293 21,840
The Bank of Tokyo-Mitsubishi UFJ, Ltd 6,728 347 7,075
BNP Paribas 5,921 200 6,121
The Royal Bank of Scotland Plc 4,214 981 5,195
Sumitomo Mitsui Banking Corporation 4,661 398 5,059
Mizuho Corporate Bank, Ltd 3,856 687 4,543
Bank of China Limited 4,131 121 4,252
UBS AG 1,696 1,361 3,057
ING Bank N.V. 2,687 0 2,687
The Hongkong and Shanghai Banking Corporation Ltd 2,181 436 2,617
Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A. 2,574 0 2,574
Top 10 Foreign-owned Bank Branches 38,649 4,530 43,179
Other Foreign-owned Bank Branches 18,099 4,517 22,616
Total Foreign-owned Bank Branches 56,748 9,047 65,795
TOTAL 424,816 52,477 477,292
24 > Australian Trade Commission Australia’s Banking Industry > 25
Over the past ten years, the fastest growing segment of commercial lending in Australia has been to larger corporations,
borrowing over A$2 million. Loans to SMEs have grown more gradually during this period.

Growth in lending by industry sector has varied considerably over the past 10 years. The fastest growing segments have been
finance and insurance, wholesale and retail trade, transport, storage, agriculture and fishing.
Australia’s Bank Lending To Business – Total Credit Outstanding by Size (A$ Billion)
Australia’s Bank Lending To Business – Total Credit Outstanding by Sector (A$ Billion)
Under $100 000 to $500 000 to $2 Million
A$100,000 < $500,000 < $2 Million and Over Total
Jun-2000 22.6 44.1 39.0 151.2 256.9

Jun-2001 22.8 46.3 42.0 164.7 275.8
Jun-2002 23.7 50.9 45.2 164.6 284.4
Jun-2003 24.3 54.3 50.2 169.7 298.6
Jun-2004 24.8 60.2 57.8 196.1 338.9
Jun-2005 24.5 66.4 67.6 215.6 374.1
Jun-2006 24.1 70.1 76.5 268.7 439.5
Jun-2007 23.0 70.8 93.3 338.0 525.1
Jun-2008 23.7 75.0 101.1 449.7 649.6
Jun-2009 25.3 72.6 103.3 489.9 691.0
Jun-2010 26.0 67.3 101.4 464.1 658.8
Share % 4.0 10.2 15.4 70.4 100.0
CAGR % 1.4 4.3 10.0 11.9 9.9
Wholesale
Trade, Retail
Agriculture, Trade & Transport Finance &
Fishing, etc Mining Manufacturing Construction & Storage Insurance Other Total
Jun-2000 23.2 7.5 30.0 13.1 34.3 39.5 109.4 256.9
Jun-2001 25.2 7.5 28.7 13.6 35.2 41.9 123.8 275.8
Jun-2002 26.8 7.5 28.9 12.8 40.7 43.4 124.2 284.4
Jun-2003 29.0 6.1 29.2 14.4 43.9 42.7 133.2 298.6
Jun-2004 34.1 5.2 31.8 17.7 49.3 47.4 153.5 338.9
Jun-2005 39.3 5.7 31.3 19.4 54.9 49.6 173.9 374.1
Jun-2006 43.5 6.8 37.1 21.3 64.2 62.5 204.1 439.5
Jun-2007 47.2 9.4 40.8 24.8 74.4 80.5 248.0 525.1
Jun-2008 53.7 11.7 44.6 30.5 87.2 123.7 298.2 649.6
Jun-2009 57.4 11.5 43.7 31.5 93.2 133.1 320.6 691.0
Jun-2010 59.3 15.1 39.7 28.3 92.9 126.1 297.4 658.8
Share % 9.0 2.3 6.0 4.3 14.1 19.1 45.1 100.0
CAGR % 9.8 7.3 2.8 8.0 10.5 12.3 10.5 9.9
Sources: Reserve Bank of Australia, Statistical Table D7 Bank Lending To Business (Last updated 16 Sep 2010); Austrade


Sources: Reserve Bank of Australia, Statistical Table D7 Bank Lending To Business (Last updated 16 Sep 2010); Austrade

Australia’s Banking Industry > 25
Syndicated Debt
Global syndicated lending for the year to December 2010 totalled US$2.7 trillion, up 49 per cent from the previous year.
The energy and power sector was most active, with a market share of 21 per cent.
Australian mandated loans rose by 42 per cent for this same period, with total proceeds of US$66 billion. Australia’s total syndicated
loans represent around 2.1 per cent of the global market. Industrials, energy, power and financials were the most active, with
combined market share of 57 per cent of total syndicated loan proceeds (24 per cent, 17 per cent and 16 per cent respectively).
Other major sectors included materials (14 per cent), real estate (14 per cent) and telecommunications (9 per cent).
36
The four major banks are prominent in this market, in terms of both arrangers and bookrunners.
37
Significant foreign
competitors include RBS, Mitsubishi, Sumitomo Mitsui, JP Morgan, Credit Agricole and HSBC.


On a five year total basis, Australian syndicated loan activity exceeded US$330 billion. Australian activity represents around
2.1 per cent of the world market and around 13 per cent of the Asia-Pacific region.
Australian Syndicated Loans Ranking
36. Thomson Reuters, Global Syndicated Loans Review, Full Year 2010.
37. Bookrunner is the main underwriter to the issue.
Mandated Arranger 2010 Rank 2009 Rank
ANZ Banking Group 1 1
Westpac Banking 2 3
Commonwealth Bank of Australia 3 2
National Australia Bank 4 4
RBS 5 7
Mitsubishi UFJ Financial Group 6 9

Sumitomo Mitsui Financial Group Inc 7 10
JP Morgan 8 18
Credit Agricole CIB 9 8
HSBC Holdings PLC 10 12
Bookrunner 2010 Rank 2009 Rank
ANZ Banking Group 1 3
Westpac Banking 2 1
Commonwealth Bank of Australia 3 4
National Australia Bank 4 2
RBS 5 6
JP Morgan 6 16
Bank of China Ltd 7 14
Mitsubishi UFJ Financial Group 8 9
Mizuho Financial Group 9 7
HSBC Holdings PLC 10 18
Sources: Thomson Reuters, Global Syndicated Loans Review, Full Year 2010; Austrade