The Australian Government began deregulating Australia banks in 1993. Following the deregulation, foreign banks were allowed to enter the country more easily, while the distinction between trading banks and savings bank was abolished. The banks that drive and determine the Australian banking sector are Commonwealth Bank of Australia, Australia and New Zealand Banking Group, Westpac Banking Corporation and National Australia Bank.
Australia Banks – Strength
The Australian government uses the “four pillars” policy to prevent mergers and acquisition between the four major banks. According to the Australian government, it is a long-standing policy and not a formal regulation. Industry analysts believe that this policy reflects the unpopularity of mergers and acquisition in Australia. Some of them believe that the policy works against the country’s interests and is built upon economic fallacies. However, all the four major banks were in the list of top ten banks in the world in 2009, with several major global banks struggling to cope up with the global financial crisis. According to a report from US based Global Finance Magazine, Australia banks are some of the safest in the world. The magazine came to this conclusion after a thorough analysis of total assets and long term credit ratings from Standard and Poor’s, and Moody’s. Those banks that had a tight grip on their risk exposure well before the financial crisis topped the list, according to the magazine. Many industry analysts believe that the improving Australian economy will support the growth of banks.
Australia Banks – Opportunities
The Australian banking sector offers growth opportunities for new entrants that provide new distribution systems and products. Also, Australia banks are increasingly looking for exporting their expertise in funds management, retail banking and private banking. Apart from the four largest banks, there are mid-tier banks such as Suncorp-Metway, the Bank of Queensland, Bendigo and Adelaide Bank and AMP. Non-banking financial institutions continue to flourish since the regulation of the Australian banking sector. Building societies and credit unions continue to grow strongly.
Australia banks are well capitalized and large by global standards. These banks have highly-developed wealth management capabilities and a strong retail base. Australia banks continued to report healthy profits even after the global financial crisis.