Studies in Australia’s Banking Industry

Description
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.

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 ?nancial
product advice as de?ned under the Corporations Act 2001 (Cwth). Nothing in this document should be construed as a recommendation or statement of opinion
intended to in?uence 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.
Austrade’s role in the promotion of Australian trade includes facilitating engagement by Australian ?nancial services exporters in markets outside Australia. Austrade
is not a promoter of any ?nancial services products or investments and does not provide investment advice. Austrade assumes no responsibility however so arising
for any company, product or service mentioned in this document, nor for any materials provided in relation to such products, nor for any act or omission of any
business connected with such products. Investors should always make their own enquiries as to whether an investment is appropriate for their needs and should
consult an independent and licensed advisor.
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 ?nancial 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 ?nancial services licences 52
Introduction 52
What is a ?nancial service? 52
What is a ?nancial 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 pro?ts 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 ?nancial 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 ?fth amongst the world’s
leading ?nancial systems and capital markets
in the 2010 World Economic Forum Financial
Development report.
Australia’s Banking Industry > 5
Australia has a strong, pro?table, sophisticated
and well regulated banking sector which is
welcoming of new entrants and increasingly
engaged in regional and global markets.
The ?nancial 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 ?fth amongst the world’s leading ?nancial
systems and capital markets in the 2010 World Economic Forum
Financial Development report.
Total assets of Australia’s banks, de?ned 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 signi?cant 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 ?nance 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 ?nance 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 re?ected in the signi?cant growth in electronic payments,
EFTPOS and ATMs in the country.
The commercial banking and corporate ?nance 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 ?nance (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 ?rms, and asset
?nance 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 ?ve years to 2010, equivalent to
2.1 per cent of world issuance.
› The second largest project ?nance market in Asia-Paci?c
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-?oating stock market in the
Asia-Paci?c 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-Paci?c, with announced deals totalling US$132
billion in 2010 and US$528 billion for the ?ve years to
2010; 3.5 per cent of globally announced deals.
› The second largest Equity Capital Market in Asia-Paci?c
and ?fth largest globally, with US$199 billion of equity
issuance over the ?ve years to 2010.
› A securitisation market that has resumed growth following
the global ?nancial 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-Paci?c’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
in?uenced 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 of?ce.
6 > Australian Trade Commission Australia’s Banking Industry > 7
The ?nancial 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 ?nancial 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 of?ces,
Superannuation Funds
& Other Managed Funds
$1,707b or 35.0%
General Insurance Of?ces
$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. De?ned 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
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Australia’s four major banks
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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 ?fth amongst the world’s 57 leading ?nancial systems and capital markets in the World Economic Forum
Financial Development Report 2010.
In addition to its geographic position in the Asia-Paci?c region, close to the world’s fastest growing economies, Australia offers:
› A sizeable domestic economy – the fourth largest in the Asia-Paci?c (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-?fth 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 ef?cient regulatory environment and legal institutions; and
› Mature and innovative ?nancial 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-?oating stock market in the Asia-Paci?c with a market capitalisation of US$1.2 trillion;
› A fast growing and liquid foreign exchange market having grown 12 per cent CAGR since 1998.
The Forbes World’s Leading Companies
Rank
1
Company Country Sales Pro?ts Assets Market Value
1 JPMorgan Chase USA 115.6 11.7 2,032.0 166.2
3 Bank of America USA 150.5 6.3 2,223.3 167.6
5 ICBC China 71.9 16.3 1,428.5 242.2
6 Banco Santander Spain 109.6 12.3 1,438.7 107.1
7 Wells Fargo USA 98.6 12.3 1,243.7 141.7
8 HSBC Holdings UK 103.7 5.8 2,355.8 178.3
11 BNP Paribas France 101.1 8.4 2,952.2 86.7
17 China Construction Bank China 59.2 13.6 1,106.2 184.3
21 Barclays UK 65.9 15.2 2,223.0 56.2
22 Bank of China China 52.2 9.5 1,016.3 147.0
29 Lloyds Banking Group UK 106.7 4.6 1,650.8 50.3
34 UniCredit Group Italy 92.2 5.6 1,438.9 44.0
43 Deutsche Bank Germany 63.0 6.9 2,150.6 39.8
44 Credit Suisse Switzerland 50.3 6.1 988.9 53.9
48 BBVA-Banco Bilbao Vizcaya Spain 49.3 6.0 760.4 48.2
51 Banco Bradesco Brazil 59.1 4.6 281.4 54.5
52 Banco do Brasil Brazil 56.1 5.8 406.5 42.8
53 Royal Bank of Canada Canada 35.4 3.6 608.1 78.2
54 Intesa Sanpaolo Italy 50.7 3.6 877.7 44.7
59 Commonwealth Bank Australia 31.8 3.8 500.2 75.1
67 Westpac Banking Group Australia 31.2 3.0 519.0 71.0
73 Crédit Agricole France 92.0 1.6 2,227.2 34.4
79 National Australia Bank Australia 32.5 2.3 574.4 48.8
83 ANZ Banking Australia 26.9 2.6 420.5 53.7
86 Toronto-Dominion Bank Canada 23.6 2.9 517.3 55.4
1. Forbes’ rank according to an equal weighting of sales, pro?ts, assets and market value.
Sources: Forbes, The World’s Leading Companies, April 2010; Austrade
(US$ 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 ?nance 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 ?nance 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$2.4 trillion) as at September 2010.
Other domestic banks accounted for 9.2 per cent, while foreign bank subsidiaries and branches accounted for 13.4 per cent.
The largest of the other domestic retail bank competitors are Suncorp-Metway, Macquarie Bank, Bendigo Adelaide Bank and
Bank of Queensland.
Of the foreign banks with a subsidiary or branch licence, ING, Bank of Scotland, Citigroup, Deutsche Bank and HSBC have the
largest presence as measured by Australian banking assets. ING now ranks ?fth in retail banking with its innovative, internet
based model. Rabobank has built a strong regional footprint drawing on its rural heritage and is now looking to widen its scale
of operations. In addition, there are a number of smaller foreign retail banking operations that target speci?c immigrant groups
including the Arab Bank, Bank of China, Bank of Cyprus and Beirut Hellenic Bank.
Market Participants
8. APRA, Monthly Banking Statistics, September 2010 (issued 29 Oct 2010).
9. Includes Bank of Western Australia Ltd (wholly owned subsidiary of the Commonwealth Bank).
10 > Australian Trade Commission Australia’s Banking Industry > 11
Assets on Australian Books of Individual Banks (A$ 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 ?nance. 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 signi?cant, with the top ?ve 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 ?ve 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 ?nancial 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 ?nancing 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 ?nancial institutions, at www.abacus.org.au.
Non-Deposit-Taking Finance Companies
Non-deposit-taking ?nance companies represent another signi?cant 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 ?nancing (i.e., motor vehicles, computers, furniture).
Examples of non-deposit-taking ?nance 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 ?nance corporation, for the
purposes of the Financial Sector (Collection of Data) Act, 2001. Further information, including a list of registered ?nancial
corporations, is available from the APRA website athttp://www.apra.gov.au/RFC/Registered-Financial-Corporations.cfm.
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 ?nancial 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, de?ned 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
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B
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Year End
Oct-2000 Dec-2001 Dec-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 Of?cehttp://www.ato.gov.au/
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 ?fth 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
$

M
i
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l
i
o
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,

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-
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8
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-
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-
2
0
0
1
0
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e
p
-
2
0
0
1
0
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 ?nancial 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 ?nancial 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, signi?cantly up from A$780 billion ?ve 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
100,000
150,000
200,000
250,000
Number of Accounts
Margin Lending Credit Outstanding (A$ Billion)
2000 2002 2001 2003 2004 2005 2006 2007 2008 2009 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 of?ces 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-Paci?c region and the 10th largest in the
world in 2009.
28
The number of HNWI in Australia, de?ned 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 Australiahttp://www.austrade.gov.au/ArticleDocuments/2792/Private-Banking-in-Australia-Publication.pdf.aspx
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 Australiahttp://www.austrade.gov.au/ArticleD...ent-Management-Industry-in-Australia.pdf.aspx
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 de?ned 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’ ?nancial assets (including deposits, assets of life of?ces, 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-Paci?c Wealth Report 2010. See also Austrade’s data alerthttp://www.austrade.gov.au/
ArticleDocuments/2792/Data-Alert-101013-Asia-Paci?c-Wealth-Report.pdf.aspx
29. See the Australian Governments ‘A tax plan for our future’http://www.futuretax.gov.au/pages/FairerSuperannuation.aspx
30. See Austrade’s publication ‘Investment Management Industry in Australia’http://www.austrade.gov.au/ArticleDocuments/2792/Investment-Management-Industry-in-
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 ?nancial system.
These reforms are aimed at boosting consumer ?exibility 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 of?cial ‘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 ?nancial 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
?nancial 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:http://www.treasury.gov.au/banking/content/_downloads/competitive_and_sustainable_banking.pdf

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 Of?ce 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 Of?ce (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 ?nance – securitisation, syndicated
loans and project ?nance.
Australia’s commercial and corporate advisory sectors are known for specialised expertise in particular industries including
energy, mining and resources, infrastructure and project ?nance, 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 of?ces. 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 ?nancial crisis – changes in Australia
largely re?ect 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 ?rms and small specialist ?nance companies provide competition in niche areas such as mergers and
acquisitions advisory. Included in this category are the larger accounting ?rms that have a corporate advisory arm, as well
as a range of smaller specialist boutique ?rms, 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 ?rms provide auxiliary services in capital market ?nancing.
Specialised Finance Companies
As in the consumer lending area, non-deposit-taking specialised ?nance companies provide an alternative source of ?nancing
for corporations and institutions. Such institutions include asset ?nance and leasing companies, vendor ?nance companies,
factoring or inventory ?nance companies and specialised trade ?nance companies.
This sector was signi?cantly affected by the ?nancial 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.http://www.austrade.gov.au/ArticleD...ent-Management-Industry-in-Australia.pdf.aspx
32. Source: APRA website athttp://www.apra.gov.au/ADI/ADIList.cfm
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 ?nancial institutions was in excess of A$620 billion as at October
2010.
33
Commercial Lending credit to the non-?nancial sector grew at a CAGR of 11.1 per cent over the ten years to October
2010, with lending to the ?nancial 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 dif?cult 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, ?nancial 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 ?nance companies provide specialised lending.
As at February 2011, the major domestic banks account for 72 per cent
34
of bank loans to non-?nancial 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 signi?cant competitors in the regional domestic banks, while the largest foreign bank competitors in non-?nancial
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
100
200
300
400
500
600
700
800
Non-financial sector (11.1%)
Financial intermediaries (18.8%)
A
$

B
i
l
l
i
o
n
Year End
Dec-2001 Dec-2000 Dec-2002 Dec-2003 Dec-2004 Dec-2005 Dec-2006 Dec-2007 Dec-2008 Dec-2009 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-?nancial 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
?nance and insurance, wholesale and retail trade, transport, storage, agriculture and ?shing.
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 ?nancials 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
Signi?cant foreign
competitors include RBS, Mitsubishi, Sumitomo Mitsui, JP Morgan, Credit Agricole and HSBC.

On a ?ve 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-Paci?c 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

26 > Australian Trade Commission Australia’s Banking Industry > 27
Project and Infrastructure Finance
The global project ?nance market showed a signi?cant rebound in 2010, with 587 deals valued at US$206.6 billion. This
represented an expansion in total loans of 44.4 per cent compared to the previous year. According to the latest survey of
Reuters Thomson, each region saw an increase in deal activity: Americas increased 24.6 per cent, Europe/Middle East/Africa
(EMEA) increased 28.3 per cent and Asia Paci?c, with the largest rise, increased 69.8 per cent.
The Asia Paci?c (including Japan) accounted for 47.2 per cent of global activity (US$97.5 billion). This increased from a global
share of 40.2 per cent in 2009 (US$57.4 billion). Australia has remained the second most active market in the region, behind
India, with 32 deals valued at US$14.6 billion
38
, which accounted for 15 per cent of the region’s total. Australia’s four major
banks all ranked within the top 20 mandated arrangers for the Asia Paci?c in 2010.
39

Infrastructure is one of the most signi?cant areas for project ?nancing and Australia is widely recognised as a global leader and
innovator in infrastructure ?nancing. The nation has a long history of engagement in the infrastructure sector, beginning with
the privatisations of the late 1980s and 1990s that has resulted in extensive experience with private infrastructure ?nancing
and public-private partnerships (PPPs).
2010 2009 2008 2007 2006 2006-2010
Proceeds Market Proceeds Market Proceeds Market Proceeds Market Proceeds Market Proceeds Market
(US$Bn) Share % (US$Bn) Share % (US$Bn) Share % (US$Bn) Share % (US$Bn) Share % (US$Bn) Share %
Global 2,718.7 100.0 1,829.9 100.0 2,624.0 100.0 4,617.9 100.0 3,981.7 100.0 15,772.2 100.0
By country
USA 1,089.0 40.1 579.2 31.7 1,036.2 39.5 2,136.2 46.3 1,735.4 43.6 6,576.1 41.7
Japan 252.1 9.3 249.2 13.6 289.7 11.0 208.4 4.5 216.3 5.4 1,215.6 7.7
UK 190.9 7.0 82.8 4.5 196.7 7.5 389.8 8.4 314.1 7.9 1,174.3 7.4
Germany 96.3 3.5 104.2 5.7 84.7 3.2 231.9 5.0 303.1 7.6 820.1 5.2
France 129.2 4.8 89.7 4.9 119.1 4.5 255.0 5.5 226.5 5.7 819.5 5.2
Canada 110.1 4.0 71.3 3.9 123.1 4.7 137.3 3.0 118.5 3.0 560.4 3.6
Australia 66.0 2.4 46.4 2.5 52.7 2.0 100.3 2.2 70.9 1.8 336.3 2.1
Taiwan 55.6 2.0 22.1 1.2 31.1 1.2 29.1 0.6 29.1 0.7 166.9 1.1
UAE 16.4 0.6 22.1 1.2 45.7 1.7 45.0 1.0 33.8 0.8 163.0 1.0
Hong Kong 41.1 1.5 18.4 1.0 10.8 0.4 20.7 0.4 31.7 0.8 122.7 0.8
Singapore 22.8 0.8 16.5 0.9 35.2 1.3 14.1 0.3 19.7 0.5 108.2 0.7
Brazil 7.8 0.3 15.0 0.8 13.9 0.5 25.3 0.5 33.6 0.8 95.6 0.6
Mexico 9.9 0.4 24.8 1.4 6.3 0.2 20.1 0.4 19.4 0.5 80.5 0.5
New Zealand 8.6 0.3 5.9 0.3 7.0 0.3 6.5 0.1 11.4 0.3 39.4 0.2
Malaysia 11.1 0.4 3.8 0.2 5.4 0.2 10.8 0.2 7.2 0.2 38.3 0.2
By Region
Americas 1,222.3 45.0 694.4 37.9 1,205.4 45.9 2,339.0 50.6 1,925.9 48.4 7,386.9 46.8
Europe 818.3 30.1 608.5 33.3 784.7 29.9 1,633.6 35.4 1,481.2 37.2 5,326.4 33.8
Asia-Paci?c/Central Asia 610.5 22.5 470.9 25.7 533.6 20.3 505.5 10.9 470.0 11.8 2,590.4 16.4
Africa/Middle East 67.6 2.5 56.1 3.1 100.3 3.8 139.9 3.0 104.6 2.6 468.5 3.0
Sources: Thomson Reuters Global Syndicated Loans Review, Full Year 2010, Syndicated Loans Review, Fourth Quarters of 2009, 2008 and 2007; Austrade

Worldwide Syndicated Loans
38. Thomson Reuters, Project Finance Review, Full Year 2010.
39. Ibid.
Australia’s Banking Industry > 27
40. KPMG, Federal Budget 2009-10 national infrastructure spending priorities June 2009.
41. Infrastructure Australia, Getting the Fundamentals Right for Australia’s Infrastructure Priorities, June 2010.
42. ABARE-BRS, Minerals and energy Major development projects report, October 2010.
Australian expertise extends across the full spectrum of economic and social infrastructure including toll roads, airports, railway
rolling stock and terminals, broadcast communications, power generators, gas and electricity transmission and distribution,
shipping ports, water utilities, schools, hospitals, aged care facilities and public housing.
The Australian infrastructure market is among the most sophisticated markets in the world with estimated A$9 billion in
infrastructure construction projects work contracted annually. In the 2009-10 Budget, the Australian Government committed
A$22 billion to improve the nation’s infrastructure in transport, communications, energy, education and health sectors as part
of the ‘Building Australia Fund’. In addition, State Governments have committed an estimated A$2.5 billion to infrastructure
projects.
40

Infrastructure needs and priorities for Australia are laid out by Infrastructure Australia. Appendix F provides an overview of
priority projects as at June 2010. The value of these projects totals almost A$83 billion.
41

Stage De?nition Total Cost Estimates
(A$ Million)
Early Stage Initiatives address a nationally signi?cant issue or problem, 19,634
but the identi?cation or development of the right solution is
at an early stage.
Real Potential Initiatives clearly address a nationally signi?cant issue or problem 41,522
and, there has been a considerable amount of analysis of potential solutions.
Threshold Initiatives have strong strategic and economic merit, and are only not 10,123
ready to proceed due to a small number of outstanding issues.
Ready to proceed Initiatives meet all of Infrastructure Australia’s criteria. 11,566
Infrastructure Australia
Infrastructure Australia (IA) was established in 2008 to coordinate a national approach to Australia’s future infrastructure
needs. The agency plays an advisory role to governments, investors and owners of infrastructure concerning:
› Signi?cant national infrastructure priorities and initiatives;
› Recommendations for policy and regulatory reforms to drive better ef?ciencies in the utilisation of national
infrastructure networks;
› Options to address hindrances to the development and provision of ef?cient national infrastructure;
› Infrastructure needs of the Australian public; and
› Possible ?nancing mechanisms.
More information on Infrastructure Australia and its policies and guidelines is available at: www.infrastructureaustralia.gov.au
In addition to public sector infrastructure projects, Australia is currently undergoing signi?cant investment in private sector
projects that will increase the output of Australia’s mineral and energy sectors.
Infrastructure projects directly associated with the minerals and energy sector currently stand at 15, with an estimated cost
of A$11.0 billion in committed projects, and a further 31 valued at A$27.8 billion in less advanced projects.
42
Committed
infrastructure projects include iron ore and coal ports, rail projects and gas pipelines. Appendix G outlines the future capital
expenditure commitments within Australia’s minerals and energy sectors.
Source: Infrastructure Australia, ‘Getting the fundamentals right for Australia’s infrastructure priorities’, June 2010http://www.infrastructureaustralia.gov.au/publications/?les/Report_to_COAG_2010.pdf
Infrastructure Australia’s Investment Priorities
28 > Australian Trade Commission Australia’s Banking Industry > 29
Trade Finance
Australia has an open, diversi?ed economy that is actively engaged in international trade and has increasingly exported goods
and services to the fast growing Asian region.
In 2010, Australia exported A$231 billion in merchandise trade, having grown at 7.7 per cent CAGR since the year 2000.
The majority of Australia’s exports are natural resources and primary products and account for around 70 per cent of Australia’s
total merchandise exports.

Over the past ten years, Australian exports to Asia have grown more rapidly than other regions. Four of Australia’s top ?ve
country export destinations are now based in Asia.

Australia’s Merchandise Exports, FOB Value (A$ Billion)
Exports – 2010 (% Share) Imports – 2010 (% Share)
2000 2002 2004 2006 2008 2010  2010 CAGR %
% Share 2000/2010
Crude Materials, Inedible, except Fuels 21.2 22.0 23.1 39.2 56.3 75.6 32.8 13.5
Metalliferous Ores & Metal Scrap 13.4 13.9 16.3 32.7 50.0 68.9 29.9 17.8
Mineral Fuels & Related Materials 23.0 24.7 23.8 39.3 71.1 66.6 28.8 11.2
Coal, Coke & Briquettes 9.3 12.9 13.5 23.4 46.9 43.1 18.7 16.5
Petroleum & Related Materials 10.5 8.6 7.1 9.8 13.8 12.9 5.6 2.1
Gas, Natural & Manufactured 3.2 3.2 3.3 6.2 10.4 10.5 4.6 12.6
Manufactures 34.9 37.2 33.9 42.0 47.1 40.4 17.5 1.5
Food & Beverage & Tobacco & Live Animals 21.0 24.1 23.7 23.4 25.2 23.7 10.3 1.2
Other
1
10.1 11.5 13.2 19.9 22.7 24.5 10.6 9.3
TOTAL 110 119 118 164 222 231 100 7.7
1. Commodities not classi?ed elsewhere in the Standard International Trade Classi?cation. CAGR = Compound Annual Growth Rate.
Sources: Australian Bureau of Statistics Cat No. 5368.0 International Trade in Goods and Services, Australia, Table 12a. Merchandise Exports; Austrade

Sources: Department of Foreign Affairs and Trade, Monthly Trade
Data Dec 2010, Table 3; Austrade
Sources: Department of Foreign Affairs and Trade, Monthly Trade
Data Dec 2010, Table 4; Austrade
East Asia 67.9%
Africa 1.6%
Europe 9.1%
South Asia 7.8%
Americas 6.1%
Oceania 4.9%
Middle East 2.9%
East Asia 54.6%
Europe 20.9%
South Asia 1.2%
Americas 14.3%
Oceania 5.3%
Middle East 2.2% Africa 1.6%
Australia’s Banking Industry > 29
In addition to merchandise trade, Australia exported A$53 billion worth of services in the ?scal year 2009-10, with travel
(including business and personal education-related services) contributing A$33.4 billion, or over 60 per cent of Australia’s
services exports.
The Australian Government also assists Australian businesses with trade ?nance solutions through the Export Finance &
Insurance Corporation (EFIC). In ?scal year 2010, EFIC provided ?nancing facilities totalling A$971.3 million that supported
export contracts and overseas investments of over A$5.9 billion.
43
Export Finance Navigator for SMEs lists the following banks with specialist trade ?nance teams
44
in Australia:
› Australia and New Zealand Bank
› Bank of Queensland
› Bendigo Bank
› Commonwealth Bank of Australia
› HSBC
› National Australia Bank
› Westpac

Australia’s Merchandise Exports by Country, FOB Value (A$ Billion)
43. Export Finance & Insurance Corporation (EFIC)http://www.e?c.gov.au/Pages/homepage.aspx
44. Export Finance Navigatorhttp://www.export?nance.gov.au/Pages/Preparingforexport.aspx

2000 2002 2004 2006 2008 2010  2010 CAGR %
% Share 2000/2010
1 China 6.0 8.4 11.0 20.4 32.3 58.3 25.3 25.5
2 Japan 21.8 22.2 22.2 32.4 50.8 43.6 18.9 7.2
3 South Korea 9.0 10.0 9.2 12.4 18.4 20.4 8.8 8.5
4 India 1.8 2.5 5.4 8.8 13.5 16.4 7.1 24.5
5 USA 11.0 11.5 9.5 10.1 12.1 9.3 4.0 -1.7
6 Taiwan 5.6 4.7 4.1 6.3 8.3 8.4 3.6 4.2
7 UK 3.8 5.6 5.1 8.1 9.3 8.3 3.6 8.3
8 New Zealand 6.6 7.9 8.8 8.9 9.3 8.0 3.5 2.0
9 Thailand 2.0 2.5 3.1 4.3 5.3 5.8 2.5 11.6
10 Singapore 5.9 5.0 3.3 4.6 6.1 4.8 2.1 -1.9
11 Indonesia 2.9 3.1 3.2 4.4 4.3 4.5 1.9 4.5
12 Malaysia 2.4 2.3 2.4 2.8 4.0 3.6 1.6 4.4
13 Hong Kong 3.6 3.5 2.7 3.2 3.0 3.2 1.4 -1.2
14 Netherland 1.8 1.4 1.5 2.8 3.6 2.6 1.1 3.9
15 UAE 1.0 1.3 1.3 2.0 3.9 2.1 0.9 7.8
16 Papua New Guinea 1.0 1.0 0.9 1.5 1.6 2.0 0.9 7.5
17 Germany 1.3 1.6 1.3 1.4 2.1 1.8 0.8 3.4
18 South Africa 1.3 1.3 1.6 2.3 2.5 1.8 0.8 3.6
19 Saudi Arabia 1.6 2.4 2.0 2.2 2.5 1.6 0.7 -0.1
20 Brazil 0.6 0.4 0.6 0.9 1.6 1.6 0.7 10.6
Other Markets 19.5 20.8 18.4 24.0 27.7 22.6 9.8 1.5
TOTAL 110 119 118 164 222 231 100 7.7
CAGR = Compound Annual Growth Rate.
Sources: Australian Bureau of Statistics Cat No. 5368.0 International Trade in Goods and Services, Australia, Table 14a; Austrade

30 > Australian Trade Commission Australia’s Banking Industry > 31
Corporate Finance and Advisory
Mergers and Acquisitions
Mergers and Acquisitions (M&A) activity improved in 2010 as the world economy recovered from the global ?nancial crisis,
according to the Thomson Reuters’ Full Year 2010 M&A Financial Advisory Review. The value of global-announced M&A
totalled US$2.4 trillion in 2010, up 22.9 per cent from 2009. Australia’s M&A announced value reached US$132 billion in 2010,
a 140 per cent increase from 2009. The rebound in Australia’s M&A activity last year was largely driven by the mining, ?nancial,
energy and telecommunications sectors.
In the Asia-Paci?c region M&A activity is heavily concentrated in the top three economies (Australia, China and Japan).
Together, their announced deals were worth around US$347 billion—accounting for more than 60 per cent of the region’s total.
Of the top ten ?nancial advisors in Australia, based on completed M&A by imputed fees, nine are foreign-based global
investment houses and one is the Australia-based Macquarie Group. They together generated US$648 million in imputed fees
in 2010, accounting for 43 per cent of Australia’s M&A advisory fees.
On a ?ve-year total basis, Australian M&A activity has been signi?cant with announced deals totalling US$528 billion. The total
value of the Australian deals was the largest in the Asia-Paci?c region. Australian activity represents around 3.5 per cent of
global deal ?ow and more than one-?fth of that of the Asia-Paci?c region.
Australia has a vibrant Private Equity (PE) market, raising A$17 billion over the ?ve years to June 2010. International and
domestic PE leveraged buyouts continue to contribute signi?cantly to M&A activities. The largest PE deal for 2010 was the
A$2.7 billion
45
buyout of Australia’s second largest private hospital owner and pathology provider, Healthscope.
Equity Capital Markets
Australia has a large and liquid equities market. During the ?nancial crisis in 2008-09, Australia’s equity capital market
provided support for corporations seeking capital off-setting, in part, the disruption experienced in international debt markets.
Total equity market raisings
46
increased by 7.5 per cent during this period with secondary market raisings rising 74 per cent
from A$50.6 billion to A$88.1 billion. Many companies raised equity through rights issues and placements to strengthen their
balance sheets and meet the short fall from debt markets at this time.
Sources: Thomson Reuters Mergers & Acquisitions Financial Advisors, Full Year 2010, Fourth Quarter 2009, Fourth Quarter 2008 and Fourth Quarter 2007; Austrade

Worldwide Announced Mergers & Acquisitions – Financial Advisors
45. Enterprise Value at time of announced deal, 19th July 2010.
46. Includes Rights Issues, placements, calls on contributing shares, exercise of options, employee share schemes, DRPs, SPPs.
2010 2009 2008 2007 2006 2006-2010
Rank Market Rank Market Rank Market Rank Market Rank Market Rank Market
Value Share Value Share Value Share Value Share Value Share Value Share
US$Bn % US$Bn % US$Bn % US$Bn % US$Bn % US$Bn %
Worldwide 2,434.2 100.0 1,980.3 100.0 2,887.0 100.0 4,169.1 100.0 3,609.9 100.0 15,080.6 100.0
Americas 1,136.3 46.7 921.7 46.5 1,156.4 40.1 1,890.4 45.3 1,762.9 48.8 6,867.7 45.5
USA 821.6 33.8 719.4 36.3 923.8 32.0 1,570.8 37.7 1,475.2 40.9 5,510.8 36.5
Brazil 104.2 4.3 65.4 3.3 93.1 3.2 46.0 1.1 33.6 0.9 342.2 2.3
Canada 99.6 4.1 95.9 4.8 85.5 3.0 197.6 4.7 162.1 4.5 640.8 4.2
Europe 641.0 26.3 581.0 29.3 1,168.7 40.5 1,592.6 38.2 1,325.2 36.7 5,308.4 35.2
UK 162.9 6.7 160.0 8.1 269.0 9.3 387.1 9.3 333.8 9.2 1,312.8 8.7
Asia-Paci?c 565.9 23.2 428.4 21.6 512.2 17.7 596.6 14.3 458.5 12.7 2,561.5 17.0
Australia 131.7 5.4 54.8 2.8 90.2 3.1 136.5 3.3 114.5 3.2 527.7 3.5
Japan 83.9 3.4 104.9 5.3 77.0 2.7 136.4 3.3 101.3 2.8 503.4 3.3
China 131.1 5.4 108.7 5.5 113.6 3.9 75.4 1.8 46.7 1.3 475.6 3.2
Africa/Middle East 91.0 3.7 49.3 2.5 49.7 1.7 89.5 2.1 63.4 1.8 342.9 2.3
Australia’s Banking Industry > 31
With 2,072 listed companies, the Australian stock market is the second largest free-?oating stock market in Asia-Paci?c after
Japan at US$1,148 billion.

New Capital Raisings for Cash in Australia (A$ Million)
Size of Key Stock Markets in the Asia-Paci?c Region
Market Capitalisation of Floating Captals (US$ Billion, 31 Dec 2010)
% of Average
Market
Survey Year IPOs Privatisations Rights Issues Placements Other
1
Total Capitalisation
1999-00 6,939 9,706 4,587 9,024 6,613 36,869 5.9
2000-01 8,519 6,400 549 4,293 5,748 25,509 3.7
2001-02 2,857 200 992 5,310 6,758 16,117 2.2
2002-03 5,961 0 2,446 7,032 7,608 23,047 3.4
2003-04 12,753 0 8,753 7,640 9,487 38,633 5.0
2004-05 14,883 0 3,242 7,896 11,125 37,146 4.1
2005-06 23,108 0 2,468 12,817 13,041 51,434 4.7
2006-07 19,694 8,679 13,001 19,789 16,742 77,905 5.6
2007-08 11,003 0 12,449 20,920 17,271 61,643 4.3
2008-09 1,885 0 28,506 38,235 21,338 89,964 7.5
2009-10 11,459 0 23,182 23,118 18,785 76,544 5.6
CAGR % 5.1 – 17.6 9.9 11.0 7.6 –
Primary Raisings Secondary Raisings
1. Other includes Calls on Contributing Shares, Exercise of Options, Employee Share Schemes, Dividend Reinvestment, Prospectus, SPP.
Sources: AFMA Australian Financial Markets Report; Austrade

0
200
400
600
800
1,000
1,200
1,400
U
S
$

B
i
l
l
i
o
n
Australia China South
Korea
Taiwan Hong
Kong
India Singapore Malaysia Indonesia Thailand Philippines New
Zealand
1,148
806
718
638
472
446
245
125
110
84
38
20
USA 14,187
Japan 2,856
UK 2,675
Canada 1,578
France 1,160
Germany 999
Sources: Standard & Poor’s, Global Broad Market Index, Dec 2010; Austrade

32 > Australian Trade Commission Australia’s Banking Industry > 33
Corporate advisory services are provided by way of arranging and underwriting new equity securities for domestically
domiciled corporations from the private and public sectors. A large portion of equity is raised in the secondary market through
rights issues (or entitlement offers) and institutional placements. Over the past three years, secondary market issuance far
exceeded primary market issuance as listed companies recapitalised and paid down debt. Commentators expect primary
issuance to increase as the market outlook improves.
Over the ?ve years, Australia’s equity capital market raised almost US$200 billion, representing 5.1 per cent of the global equity
raisings of US$3.9 trillion.

All ten of the world’s largest arrangers operates in the Australian equity capital markets. In 2010, A$29.1 billion equity was
raised with estimated imputed fees of A$756 million.
47

2010 2009 2008 2007 2006 2006-2010
Proceeds Market Proceeds Market Proceeds Market Proceeds Market Proceeds Market Proceeds Market
(US$Bn) Share % (US$Bn) Share % (US$Bn) Share % (US$Bn) Share % (US$Bn) Share % (US$Bn) Share %
USA 200.9 23.5 249.1 28.5 238.2 37.7 227.1 27.8 208.1 28.9 1,123.4 28.9
Europe, Middle 179.6 21.0 268.7 30.8 214.8 34.0 345.2 42.3 228.9 31.8 1,237.2 31.8
East & Africa
2

Asia Paci?c 306.6 35.9 165.7 19.0 79.0 12.5 159.5 19.6 141.9 19.7 852.7 21.9
(ex Japan & Australia)
Japan 58.3 6.8 64.3 7.4 15.1 2.4 25.4 3.1 68.0 9.5 231.1 5.9
Australia 29.1 3.4 58.9 6.8 40.1 6.4 36.7 4.5 34.5 4.8 199.4 5.1
Latin America 51.6 6.0 30.5 3.5 24.2 3.8 49.4 6.1 17.8 2.5 173.5 4.5
Global Total
2
854.2 872.7 631.3 815.5 719.5 3,893.1

Jan 1 2010 – Dec 31 2010 2010 Market Manager Market
Bookrunner Rank Proceeds Share (%) Fees Share (%)
UBS 1 8,366 26.1 144.8 19.2
Bank of America Merrill Lynch 2 3,088 9.6 46.8 6.2
Credit Suisse 3 2,393 7.5 37.6 5.0
RBS 4 2,179 6.8 56.1 7.4
JP Morgan 5 2,154 6.7 42.0 5.6
Goldman Sachs & Co 6 2,144 6.7 37.2 4.9
Macquarie Group 7 1,694 5.3 49.1 6.5
Morgan Stanley 8 1,455 4.5 27.2 3.6
Citi 9 1,094 3.4 19.1 2.5
Deutsche Bank AG 10 1,077 3.4 22.5 3.0
Top Ten Total 25,643 80.0 482.4 63.8
Industry Total 32,056 100.0 755.7 100.0
1. Including Intial Public Offerings, Secondary Offerings and Convertible Offerings.
2. The regional total for Europe, Middle East & Africa in 2007 include Rights Offers that are not included in other regional sub-totals or the Global total.
Sources: Thomson Reuters Global Equity Capital Markets, Full Year 2010, Fourth Quarter 2009, Fourth Quarter 2008 and Fourth Quarter 2007; Austrade

Global Equity Capital Markets – Equity and Equity-Related
1

Australian Equity Capital Markets
Proceeds per Bookrunner (A$Mn) Imputed Fees (A$Mn)
Sources: Thomson Reuters, Equity Capital Markets Review, Full Year 2010, Australian Equity Capital Markets; Austrade

47. Thomson Reuters, Equity Capital Markets Review, Full Year 2010.
Australia’s Banking Industry > 33
The Government is progressing towards the introduction of competition to exchange markets in Australia. On 1 August 2010,
market supervision for local exchanges transferred to the Australian Securities and Investment Commission (ASIC) and in April
2011, ASIC published new market integrity rules to provide the framework for the introduction of competition in equity exchange
markets. These rules are expected to begin on 31 October 2011.
48
On 4 May 2011, the Government granted a licence to Chi-X
Australia Pty Ltd as an alternative securities exchange. In a joint media release, the Treasurer and Assistant Treasurer said
“Competition in Australia’s ?nancial markets is critical to promoting exchange innovation, lowering transaction costs for market
participants, leveraging our pool of national superannuation savings, and improving liquidity and access to capital for companies”.
49
Debt Capital Markets
Debt capital markets include the issuance of bonds by Australian governments and non-government institutions, asset-backed
securities and Kangaroo bonds (bonds issued in Australian dollars by non-residents).
Australia has US$1.4 trillion debt securities outstanding – the region’s third largest amount after Japan and China. Australian
governments and business issue in both domestic and international markets. Domestic debt market issuance totalled
A$116.6 billion
50
in 2010 with A$70.3 billion
51
issued through offshore markets – namely the US, Europe and Japan.

Over the decade to June 2010, non-government debt outstanding more than tripled from around A$400 billion to A$1.3 trillion.
Non-government debt securities were more than four times the government debt securities outstanding with the local ?nancial
institutions being the largest issuers in these markets.

48. Australian Securities and Investment Commission ‘10-151MR ASIC ready for market supervision’http://www.asic.gov.au/asic/asic.nsf/byheadline/10-151MR+ASIC+rea
dy+for+market+supervision?openDocument. ASIC ’11-87MR ASIC publishes ?nal competition market integrity rules’ 29 April 2011http://144.140.79.138/asic/asic.nsf/
byheadline/11-87MR+ASIC+publishes+?nal+competition+market+integrity+rules?openDocument
49. Australian Government Treasury ‘Government approves new ?nancial markets competitor’ 4 May 2011http://ministers.treasury.gov.au/DisplayDocs.
aspx?doc=pressreleases/2011/067.htm&pageID=003&min=brs&Year=&DocType
50. Includes public domestic non-government bonds (including Kangaroo bonds), semi-government bonds and asset backed securities. Does not include The
Commonwealth Government of Australia’s bonds that had gross bond issuance of A$58.4 billion in the year to June 2010. See the AOFM Annual Reporthttp://www.aofm.
gov.au/content/publications/reports/AnnualReports/2009-2010/download/AOFM_Annual_Report_2009-10.pdf
51. Australian and New Zealand entities. Source, INSTO League Tables as at 10 January 2011.
International and Domestic Debt Securities – Amount Outstanding
Residence of Issuer (US$ Billion, June 2010)
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Domestic Securities
International Securities
U
S
$

B
i
l
l
i
o
n
China Australia South
Korea
India Malaysia Taiwan Thailand Hong
Kong
Singapore Indonesia Philippines New
Zealand
USA
Japan
UK
France
Germany
Italy
Canada
25,081
12,457
1,550
2,850
2,411
3,192
1,336
6,177
168
3,500
1,694
1,901
1,001
592
2843
24
845
531
1049
126
655
30
205
26
225
5
201
8
117
50
115
51
106
23
58
37
32
9
Sources: Bank for International Settlements, Quarterly Review, Dec 2010, Tables 11 and 16A; Austrade
34 > Australian Trade Commission Australia’s Banking Industry > 35
In 2010, public domestic bond issuances (including self-led deals) in Australia totalled 194 deals valued at A$116.6 billion. By
far the majority of these issues were in public domestic non-government bonds, the bulk of which were issued by ?nancial
institutions (106 deals valued at A$69.6 billion). This ?gure also includes 76 Kangaroo bond issues (foreign entity bonds issued
through the domestic market in Australian dollars) valued at A$36.1 billion.

Bonds issued onshore totalled A$417 billion at June 2010, of which A$294 billion was issued by locally domiciled entities and
A$124 billion issued by non-resident issuers (Kangaroo bonds). Australia’s ?nancial institutions are the largest issuers of bonds
in the local market.
Australia’s Debt Securities Outstanding (Fiscal year ending June, A$ Billion)
Public Domestic Bond Issuances
including self-led deals 01/01/2010 – 31/12/2010
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
Non-Government Short Term
Non-Government Long Term
Non-Government Overseas
Government
A
$

B
i
l
l
i
o
n
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Sources: Reserve Bank of Australia, Statistical Table D4 (data downloaded 30 Sep 2010); Austrade
1. Includes A$36.1 billion Kangaroo bonds.
Source: INSTO League Tables as at 10 January 2011
Bookrunner A$m Deals
Public Domestic non-government¹ 81,665 149
Semi-government bonds 13,100 10
Public Domestic ABS 21,785 35
TOTAL 116,550 194
Australia’s Banking Industry > 35
Australia’s Corporate Bonds Outstanding Issued Onshore
1

Public Domestic Non-Government Bonds
1
including self-led deals 01/01/2010 – 31/12/2010
Banks and Other Non-?nancial Asset- Non-Residents
A$ Billion Financial Corporations corporations backed (Kangaroo Bonds) Total
Jun-2000 19 17 24 9 70
Jun-2001 24 23 30 18 95
Jun-2002 27 28 42 21 117
Jun-2003 28 32 52 20 132
Jun-2004 35 33 64 34 166
Jun-2005 48 39 79 48 214
Jun-2006 64 42 99 81 286
Jun-2007 78 48 122 103 352
Jun-2008 99 45 112 110 366
Jun-2009 135 41 99 103 378
Jun-2010 172 41 81 124 417
Share % 41.1 9.7 19.5 29.7 100.0
CAGR % since 2000 24.3 8.9 12.8 30.1 19.5
Australia’s major banks were the largest arrangers in 2010 with many foreign banks providing competition in the market.
Rank Bookrunner A$m Deals
2
1 ANZ 14,871 53
2 National Australia Bank 10,663 21
3 Westpac Institutional Bank 10,106 36
4 Commonwealth Bank of Australia 9,669 35
5 UBS 7,896 34
6 RBC Capital Markets 7,488 40
7 TD Securities 5,963 34
8 JPMorgan 2,971 10
9 HSBC 2,933 5
10 Royal Bank of Scotland 2,546 12
11 Deutsche Bank 2,392 13
12 Credit Suisse 1,058 5
13 BNP Paribas 1,017 5
14 Macquarie Group 629 3
15 BMO Capital Markets 350 2
16 Merrill Lynch 300 1
17 Barclays 300 1
18 Nomura 238 2
19 Nikko SSB 225 1
20 RaboBank 50 1
TOTAL 81,665 149
1. A$50 million minimum, 1 year minimum. Pricing must be disclosed. All increases eligible. Excludes ASX listed corporate bonds.
2. Bookrunners given equal allocation.
Source: INSTO Leagues Table, as at 10 January 2011
1. Long-term non-government securities issued in Australia.
Sources: Reserve Bank of Australia, Statistical Table D4 Debt Securities Outstanding; Austrade
36 > Australian Trade Commission Australia’s Banking Industry > 37
0
10
20
30
40
50
60
Onshore
Offshore
Purchases by the AOFM
A
$

B
i
l
l
i
o
n
Year
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
A recent Government review, Australia as a Financial Centre (November 2009),
52
found that “if Australia is to develop as a
leading ?nancial centre that provides liquid and ef?cient ?nancial services across a broad range of products and asset classes,
then a more diversi?ed and liquid bond market should be part of that vision.”
In May 2010, the Government announced that the Australian Securities and Investment Commission (ASIC) would introduce
a class order relief permitting listed entities, within certain parameters, to issue bonds to retail investors using a simpli?ed
process.
53
The initiatives simplify the disclosure requirements for certain offers of listed vanilla bonds by allowing such offers to be made
with reduced disclosure under a short-form prospectus. The measures also allow vanilla bonds to be offered under a two-part
prospectus, comprising a base prospectus (which may be used for a number of different offers) and a second part prospectus
(which will relate to a particular offer).
In December 2010, the Government announced further reforms, including reducing red tape associated with issuing corporate
bonds to retail investors, streamlining disclosure requirements and prospectus liability regulations. It will also facilitate the
trading of Commonwealth Government Securities on a securities exchange in Australia, as part of its broader agenda to foster
a deep and liquid corporate bond market.
54
Asset-backed Securities
Australia’s asset-backed securities market has operated for over twenty years and has provided funding for Australian commercial
and residential mortgages, credit cards, auto and equipment leases, and other asset-backed securities (ABS). The largest
component of this market has been residential mortgage backed securities (RMBS) which represents around 77 per cent of
Australian ABS on issue. Worldwide, this market was dramatically affected by the credit crisis. Recent RMBS issuance in Australia
has increased from a low of A$9.9 billion in 2008 to A$14.1 billion and A$19.5 billion in 2009 and 2010 respectively.

Commercial banks (both domestic and foreign) are the main arrangers in the local market.
52. ‘Australia as a Financial Centre’ Reporthttp://www.austrade.gov.au/ArticleD...ent-Management-Industry-in-Australia.pdf.aspx
53. Australian Securities and Investment Commission ‘MR10-98 Prospectus relief to help corporate bond market’http://www.asic.gov.au/asic/asic.nsf/byheadline/MR10-98+Pr
ospectus+relief+to+help+corporate+bond+market?openDocument
54. See Australian Government ‘Competitive and Sustainable Banking System’ reporthttp://www.treasury.gov.au/banking/content/_downloads/competitive_and_sustainable_
banking.pdf
Australian RMBS Issuance $A Equivalent, Annual
Sources: The Reserve Bank of Australia, ‘The State of Play in the Securitisation Market’, 30 November 2010; Austrade
Australia’s Banking Industry > 37
Rank Bookrunner A$m Deals
1 Westpac 4,788 15
2 Deutsche Bank 3,553 12
3 Macquarie 3,368 9
4 National Australia Bank 3,231 13
5 ANZ 1,855 9
6 Commonwealth Bank of Australia 1,421 6
7 Royal Bank of Scotland 1,181 4
8 JPMorgan 662 3
9 Credit Suisse 636 4
10 Suncorp Metway 533 1
11 Barclays 217 2
12 Bank of Scotland 204 1
13 Lloyds TSB 136 1
Source: INSTO Australian League Tables, as at 13 January 2011
Securitisation remains an important funding source for non-bank lenders, regional banks, building societies and credit unions.
The Australian Government continues to offer support to this market through the Australian Of?ce of Financial Management’s
(AOFM’s) active buying program of high quality AAA-rated RMBS. In December 2010, the Federal Treasurer announced an
additional A$4 billion commitment to the AOFM’s purchasing program, taking the total AOFM program to A$20 billion. Since
2008 the AOFM has purchased 74 tranches in 46 RMBS deals totalling A$12.8 billion.
As part of the Federal Government’s Banking Reforms announced in December 2010, the Treasury will accelerate work on
designing structures for the issuance of bullet RMBS. In late 2010, two Australian issuers – BankWest and Bendigo Adelaide
Bank – issued tranches with bullet features. More recently, the Commonwealth Bank of Australia issued a A$3 billion RMBS
deal with a soft bullet tranch worth A$525 million. Bullet structures may increase the investor universe to include those who
require non-amortising principal repayments. Bullet RMBS could be eligible for inclusion in certain bond market indices –
opening the market to institutional investors restricted to the securities listed in these indices.
Further details on Australia’s Residential Mortgage Backed Securities Market can be found at Austrade’s January 2011
publication ‘Securitisation. Australian Residential Mortgage Backed Securities’ available athttp://www.austrade.gov.au/
ArticleDocuments/2792/Data-Alert-110124-RMBS.pdf.aspx
Kangaroo bonds
Kangaroo bonds are corporate, semi-government or supranational bonds issued by non-resident entities through A$ markets.
The Kangaroo bond market is the fastest growing sector of Australia’s domestic bond market, having increased considerably
since the late 1990s with many non-resident corporations issuing bonds into the market during the decade commencing
2000. Over the ten years to October 2010, Kangaroo bonds outstanding have increased from A$9 billion to almost A$130
billion, a CAGR of 27.7 per cent.
Public Domestic Asset-Backed Securities including self-led deals 01/01/2010 – 31/12/2010
38 > Australian Trade Commission Australia’s Banking Industry > 39
The attractiveness of the market is intrinsically tied to the development of Australia’s foreign currency swap market. The
development of Australia’s swap market provides competitive pricing for foreign ?rms to swap currency exposures back into
their local currencies. In 2010, a total of A$36.1 billion was issued across 76 transactions. Arrangers included the Australian
operations of foreign banks and Australia’s major banks.

Rank Bookrunner A$m Deals
2
1 RBC Capital Markets 6,572 37
2 TD Securities 5,963 34
3 UBS 4,558 24
4 Australia and New Zealand Bank 4,083 21
5 Commonwealth Bank of Australia 3,196 16
6 HSBC 2,433 4
7 Westpac Institutional Bank 2,317 11
8 JPMorgan 2,117 7
9 Deutsch Bank 1,942 11
10 Royal Bank of Scotland 775 4
11 National Australia Bank 567 3
12 BMO Capital Markets 350 2
13 Credit Suisse 325 2
14 Merrill Lynch 300 1
15 Nomura 238 2
16 Nikko SSB 225 1
17 BNP Paribas 100 1
18 RaboBank 50 1
TOTAL 36,110 76
1. A$50 million minimum, 1 year minimum. Pricing must be disclosed. All increases eligible.
2. Bookrunners given equal allocation.
Source: INSTO Australian Financial Markets League Tables
Kangaroo Bonds
1
0
20
40
60
80
100
120
140
B
o
n
d
s

O
u
t
s
t
a
n
d
i
n
g

A
$

M
i
l
l
i
o
n

1
9
9
2
1
9
9
3
1
9
9
3
1
9
9
4
1
9
9
4
1
9
9
5
1
9
9
5
1
9
9
6
1
9
9
6
1
9
9
7
1
9
9
7
1
9
9
8
1
9
9
8
1
9
9
9
1
9
9
9
2
0
0
0
2
0
0
0
2
0
0
1
2
0
0
1
2
0
0
2
2
0
0
2
2
0
0
3
2
0
0
3
2
0
0
4
2
0
0
4
2
0
0
5
2
0
0
5
2
0
0
6
2
0
0
6
2
0
0
7
2
0
0
7
2
0
0
8
2
0
0
8
2
0
0
9
2
0
0
9
2
0
1
0
1. Long-Term Non-Government Securities Issued in Australia – Non-Residents.
Sources: Reserve Bank of Australia, Statistical Table D4 Debt Securities Outstanding
Public Domestic Kangaroo Bonds
1
including self-led deals 01/01/2010 – 31/12/2010
Australia’s Banking Industry > 39
Many Kangaroo bonds have high credit ratings and, as they can be eligible collateral for use by ADIs in repurchase
agreements with the RBA, provide extra liquidity to holders of these bonds. The local investors for these bonds include
domestic and foreign banks and local ?xed-interest fund managers. Non-resident issuers bene?t from an alternative funding
source in a developed market with strong common law, a developed derivatives market and a fast growing pension funds
industry.
Austrade’s publication ‘Investment Management Industry in Australia’ highlighted that Australia’s asset allocation to ?xed
income investments has been maintained at 12-15 per cent over recent years. With superannuation funds projected to
continue to grow strongly over the coming decades, the appetite for quality bond issuance in the Australian market place is
expected to continue.

Over-the-counter and exchange-traded markets
The 2010 Australian Financial Markets Report, released by the Australian Financial Markets Association (AFMA), shows that
Australia’s annual turnover of over-the-counter and exchanged-traded markets have exceeded A$100 trillion. Aggregate
Australian ?nancial markets (over-the-counter (OTC) and exchange-traded) turnover rose 5.4 per cent to almost A$102 trillion
in 2009-10, reversing the global ?nancial crisis induced decline (16.3 per cent) of the previous year. The total market turnover
in 2009-10 was more than two and half times that of ten years ago, reinforcing the growth in depth and sophistication of
Australia’s ?nancial markets.

Australia Financial Markets Annual Turnover
CAGR = Compound Annual Growth Rate.
Sources: 2010 Australian Financial Markets Report and various previous year reports; Austrade
Financial Year Ending June 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10
OTC Markets 27.4 30.3 37.9 42.5 53.3 51.7 60.5 70.9 73.0 69.9 66.7 9.3
Foreign Exchange 15.9 18.2 21.8 26.4 34.1 33.6 41.6 46.9 46.7 44.3 40.3 9.7
Other 11.4 12.1 16.1 16.2 19.2 18.1 18.9 23.9 26.3 25.6 26.4 8.7
Exchange Traded Markets 10.8 11.7 12.2 13.8 17.8 24.1 29.5 39.0 42.3 26.6 35.0 12.5
Equities 0.5 0.6 0.7 0.7 0.9 1.2 1.4 1.8 2.2 1.5 1.9 14.8
Futures 10.3 11.2 11.5 13.1 16.9 22.9 28.0 37.2 40.1 25.1 33.2 12.4
All Financial Markets 38.1 42.0 50.2 56.4 71.1 75.7 89.9 109.8 115.3 96.5 101.7 10.3
OTC Markets -2.1 10.6 25.3 12.2 25.3 -3.1 17.0 17.2 3.0 -4.3 -4.6 65.6
Foreign Exchange -16.7 14.0 19.9 20.9 29.2 -1.4 23.9 12.8 -0.5 -5.1 -9.1 39.6
Other 29.6 5.7 33.5 0.4 18.9 -6.1 4.4 26.9 10.0 -2.7 3.1 26.0
Exchange Traded Markets 2.1 8.7 4.5 13.0 28.9 35.1 22.5 32.2 8.6 -37.1 31.6 34.4
Equities 24.9 18.0 29.5 4.8 17.7 32.1 24.7 24.9 21.2 -31.8 24.2 1.8
Futures 1.3 8.2 3.3 13.5 29.5 35.2 22.4 32.6 7.9 -37.3 32.0 32.6
All Financial Markets -0.9 10.0 19.5 12.4 26.2 6.5 18.8 22.1 5.0 -16.3 5.4 100.0
(A$ Trillion)
% Change on a Year Ago
Market Share
% 2009-10
CAGR %
since
2000
40 > Australian Trade Commission Australia’s Banking Industry > 41
The Payments System Board (PSB) of the Reserve Bank of Australia (RBA) oversees the payments system and is responsible
for promoting the safety and ef?ciency of the payments system. Through the Payment Systems (Regulation) Act 1998 and the
Payment Systems and Netting Act 1998, the Reserve Bank has a clear mandate to oversee the operation of the payments system.
The Australian Payments Clearing Association (APCA) is the Australian payments industry’s principal self-regulatory body.
It is the primary vehicle for payments industry collaboration with a mandate to manage and develop regulations, procedures,
policies, and standards governing payments clearing and settlement within Australia.
The sophistication and competitive nature of Australia’s payments system is re?ected in the changing nature of access points
to the system. Access to the payments system comes from bank and non-bank (credit union and building society) branches,
Bank@Post,
55
ATMs and EFTPOS
56
terminals.
Cash remains the most important payment instrument for small retail transactions and accounts for the highest volume of
transactions. Non-cash payments account for most of the value of payments in the Australian economy. It is estimated that
approximately A$220 billion
57
of non-cash payments are made each business day, equivalent to 20 per cent of GDP.
Arrangements for clearing most payment instruments – cheques, direct entry payments, ATMs, EFTPOS and high-value
payments – are coordinated by APCA. Scheme credit and debit cards (MasterCard and Visa) and BPAY are cleared
independently of APCA.
The Reserve Bank of Australia announced in May 2010 that the Payments System Board is undertaking a strategic review of
innovation in the Australian payments system. The objective is to identify areas in which innovation in the Australian payments
system may be improved through more effective co-operation between stakeholders and regulators. Further details are
available at the RBA’s website:http://www.rba.gov.au/media-releases/2010/mr-10-14.html
Appendix H outlines further details on Australia’s Payment and Settlement Systems.
Operations Processing
Outsourcing and offshoring of mid and back of?ce activities undertaken by commercial banks and capital market participants
is a key strategy aimed at reducing costs and improving ef?ciencies. The following table provides an overview of relevant
operations functions and products for these ?rms.
Operations currently being carried out in Australia vary by company, re?ecting a range of global and national strategies.
A 2008 survey of operations heads for 45 commercial banks found that almost 20 per cent of 3,500 operations staff in
Australia support activities outside Australia and New Zealand.
58

The large Australian domestic banks undertake the bulk of their operations functions in Australia, with some evidence of
offshoring to London, Singapore and India. ANZ Bank, for example, has back of?ce operations in Melbourne, Wellington,
Bangalore, Fiji, Singapore and Hong Kong, and has recently announced a new centre in Manila.
For foreign banks, there is a mix of models, including supporting their Australian and New Zealand operations from Australia,
supporting operations for the Asia-Paci?c region, and using Australia as a global service centre within a ‘follow-the-sun’
operations model.
Transaction Services – Payments System
55. ‘Bank@Post’ (formerly giroPost) provides a limited range of ?nancial services at certain Australia Post of?ces on behalf of member ?nancial institutions. In June 2010,
member institutions comprised Adelaide Bank, Bank of Queensland, BankWest, Bendigo Bank, Citibank, Commonwealth Bank, HSBC Bank Australia, ING Direct, Members
Equity, National Australia Bank, St. George Bank, B&E Ltd, GE Capital Finance Australia, Heritage Building Society, IMB Ltd, Maitland Mutual Building Society, RAMS Home
Loans, Wide Bay Australia Ltd and 56 credit unions.http://www.rba.gov.au/statistics/tables/xls/c08hist.xls
56. EFTPOS – Electronic Funds Transfer at Point of Sale. Payment occurs through hand held terminals at the point of sale through a debit to a customer’s savings or cheque
account with corresponding credit to the merchants’ account.
57. RBA website,http://www.rba.gov.au/payments-system/about.html
58. Survey of members of the AFMA Operations committee, 2008.
Australia’s Banking Industry > 41
Operations Functions
Staff supporting ?nancial markets product processing
Operational Risk
Market Risk
Credit Risk
Nostro Reconciliations & Investigations
Accounting
Back Of?ce Service Provider
Custodial Services
Trade Finance Processing
Equity Clearing Services
Future Clearing Services
Stock Broking
Other
Margin Lending
Operations Products
Money Market
Debt
Foreign Exchange/OTC Derivatives
Futures
OTC Interest Rate Derivatives
Energy
Equities
OTC Credit Derivatives
Precious & Base Metals
OTC Equity Derivatives
Managed Funds
Agricultural Commodities
Real property
Source: Invest Australia & AFOA, “ AFOA Member Survey: Summary Report”, September 2006.
Operations Functions and Products
Australia is viewed as being best suited for operations related to more complex ?nancial products, such as equities and
derivatives, treasury, non-automated con?rmations, structured transactions, gold, electricity and carbon trading, over-the-
counter transactions, corporate actions, risk management and process renewal and engineering.
Key criteria in selecting a location to establish or expand ?nancial service operations include cost of labour, availability of skilled
labour with suitable ?nancial services skills, as well as access to a pro?cient, English speaking and multi-lingual work force.
The skilled workforce is seen as Australia’s greatest strength. Australia has a very highly skilled, multilingual workforce, which
ranks favourably across the region and other major ?nancial centres.

42 > Australian Trade Commission Australia’s Banking Industry > 43
Complementing the Australian university educated population is vocational and professional training that is focused speci?cally
on ?nancial service operations. For example, TAFE NSW (Technical and Further Education commission) recently launched a
training certi?cate in ?nancial services focused speci?cally on back of?ce operations.
59
In addition, the Australian Financial
Markets Association offers a range of professional training courses leading to a ?nancial services operations designation.
60

Australia’s major ?nancial centres – Sydney and Melbourne – also have comparatively high proportions of their populations
with tertiary education and employed in ?nancial services.
59. TAFE NSW is Australia’s leading vocational education and training provider and operates through 10 institutions and 130 campuses across the State of New South Wales.http://www.tafensw.edu.au/howex/servlet/Course?Command=GetCourse&CourseNo=11343
60.http://www.afma.com.au/learning/quali?cations/opsaccred.html
Sources: (a) Institute for Management Development (IMD), Switzerland, IMD World Competitiveness Online 1995-2010 (Updated: May 2010, 58 economies); (b) World
Economic Forum, Switzerland and Harvard University, Global Competitiveness Report 2009-10 (133 economies); (c) The United Nations Development Programme (UNDP),
Human Development Report 2009 (182 economies), Statistical Annex, Table H; Austrade
Australia China India Hong Kong Japan Singapore USA UK
World Competitiveness Yearbook
2010 Ranking
a
in:
Attracting and Retaining 3 16 8 23 13 2 10 39
University Education 7 49 22 23 36 1 10 28
Labour Productivity (PPP) 9 55 58 22 25 21 3 14
Management Education 18 46 13 27 40 2 8 29
Global Competitiveness Report
2009-10 Ranking
b
in:
Secondary Enrolment Rate 1 89 107 73 24 17 43 36
Reliance on Professional Management 7 46 30 38 19 8 11 13
Quality of Scienti?c Research Institutions 10 35 25 34 15 12 2 4
Tertiary Enrolment Rate 13 80 100 66 32 29 6 30
UNDP’s Human Development Report
2009 Ranking
c
in:
Human Development Index (HDI) 2 92 134 24 10 23 13 21
Workforce Skill Base Comparisons
Selected Demographic Comparisons
1
– Mid Year 2009
1. For New York City, the closest available ?gure for population, mid-2008 is used. The latest data available for students is from 2008. State-wide public and private institution students (studying in
Australia) data was used for Sydney (New South Wales) and Melbourne (Victoria). For Singapore, data represents 2008 full-time enrolment. For London and Hong Kong, data represents 2008-09
academic year.
Sources: AUSTRALIA: Australian Bureau of Statistics (ABS), cat. no. 3101.0, Australian Demographic Statistics, Dec 2009; ABS cat. no. 6291.0.55.001 Labour Force; ABS cat. no. 6291.0.55.003
E03_aug 94 – Employed Persons by Sex, Industry, Capital City-Balance of State, Hours Worked; Department of Education, Employment and Workplace Relations; Austrade. USA: US Census
Bureau, Population Division, Table 27: Incorporated Places over 100,000 or more Inhabitants in 2008 population; State of New York and U.S. Bureau of Labour Statistics, Quarterly Census of
Employment and Wages; U.S. Department of Labour, Bureau of Labour Statistics, Status of the Civilian Labour Force. UK: Of?ce of National Statistics (ONS), Statistical Bulletin, Population
Estimates June 2010; ONS Time series Labour Market Statistics 18A Regional Labour Market Summary (data downloaded 28 June 2010); London Development Agency, Mayor of London, The
Mayor’s Economic Development Strategy for London, Table 1: London Higher, HESA Fact sheets, Student numbers in London 2008-09. HONG KONG: Census and Statistics Department, Hong
Kong in Figures 2010 Edition, February 2010; Education Bureau. SINGAPORE: Ministry of Manpower (MOM), online Statistics, Labour Force; MOM Research and Statistics Department, Labour
Market, Second Quarter 2009 Table 1.1; Statistics Singapore Ministry of Education, Education Factsheet 2009
(’000) Melbourne Sydney New York City London Hong Kong Singapore
Population 3,996 4,504 8,364 7,754 7,004 4,988
Labour Force 2,114 2,379 3,994 4,052 3,695 3,030
Employed Persons – All Industries 1,979 2,223 3,609 3,676 3,504 2,906
Finance and Insurance 90 142 315 332 210 158
% of Total Employed Persons 4.5 6.4 8.7 9.0 6.0 5.4
Universities – Total Enrolled Students 179 251 446 426 102 53
% of Total Population 4.5 5.6 5.3 5.5 1.5 1.1
Australia’s Banking Industry > 43
44 > Australian Trade Commission Australia’s Banking Industry > 45
This section provides an overview of the regulation of banks and other ?nancial institutions in Australia and summarises
the key considerations that are most relevant to a foreign ?nancial institution considering the establishment of an Australian
operation (Australia’s taxation laws are separately considered in the section entitled ‘Taxation’). However, a full discussion
of all relevant considerations is beyond the scope of this publication and it is necessary to seek independent legal advice in
all cases.
Regulation of the ?nancial system
Overview
Australia’s ?nancial regulation framework is based on three separate agencies, operating on functional lines. These regulatory
bodies have prime responsibility for maintaining the safety and soundness of ?nancial institutions, protecting consumers, and
promoting systemic stability through implementing and administering the regulatory regimes that apply to the ?nancial sector.
Speci?cally:
› (a) Australian Prudential Regulation Authority (APRA) is responsible for prudential regulation and supervision of ADIs
(including Australian incorporated banks, the Australian branches of foreign banks, building societies and credit unions),
as well as life and general insurance companies (including reinsurers and friendly societies) and most participants in the
superannuation (retirement savings) industry;
› (b) Australian Securities and Investment Commission (ASIC) is the corporate, markets and ?nancial services regulator,
responsible for market conduct and investor protection; and
› (c) The Reserve Bank of Australia (RBA) is responsible for monetary policy, overseeing ?nancial system stability and
oversight of the payments system.
Responsibility for the day-to-day supervision of ?nancial institutions and markets lies with these individual regulatory
bodies. The broad framework for the regulation of the ?nancial sector is determined by the Australian Government, with
the involvement of the Federal Treasury and the Council of Financial Regulators (whose membership consists of high-level
representatives of the RBA, Federal Treasury, APRA and ASIC).
In addition, the Australia Competition and Consumer Commission (ACCC) is responsible for competition policy, with a mandate
which extends across the entire economy, including the ?nancial services sector. Further details of the key regulators are set
out below.
Australian Prudential Regulation Authority
APRA is the key prudential regulator for the Australian ?nancial system. APRA’s core mission is to establish and enforce
prudential standards and practices designed to ensure that, under all reasonable circumstances, ?nancial promises made
by the institutions APRA supervises are met within a stable, ef?cient and competitive ?nancial system. APRA also acts as the
national statistical agency for the Australian ?nancial sector and plays a role in preserving the integrity of Australia’s retirement
incomes policy.
APRA’s risk-based approach is underpinned by supervisory tools developed within the authority to ensure that risks are
assessed rigorously and consistently, that critical warning signs are identi?ed early and that our supervisory response is
prompt and measured. APRA is provided with strong statutory powers to regulate and intervene in the operations of ?nancial
institutions, including:
› (a) authorisation or licensing powers, including the power to revoke a supervised entity’s authorisation if it fails to meet
statutory requirements or prudential standards;
› (b) powers to make, apply and enforce prudential standards;
› (c) powers to collect information, to conduct on-site examinations of supervised entities and to require third-party audits;
and
Regulation and Tax Environment
Australia’s Banking Industry > 45
› (d) powers to act in certain circumstances to protect depositors, policy holders and superannuation fund members and to
maintain the stability of the ?nancial system, including powers related to investigating, giving directions and assuming
control of supervised entities in dif?culty. APRA can appoint a statutory manager to assume full control of an ADI.
APRA has developed a regulatory framework for ADIs under the Banking Act which is based on the banking supervision
principles published by the Basel Committee on Banking Supervision. The framework for prudential regulation includes
requirements regarding capital adequacy, credit risk, market risk, securitisation, liquidity, credit quality, large exposures,
associations with related entities, outsourcing, business continuity management, risk management of credit card activities,
audit and related arrangements for prudential reporting, governance and ?t and proper management.
Australian Securities and Investments Commission
ASIC is an independent statutory body that is Australia’s corporate, markets and ?nancial services regulator. It acts under
the Australian Securities and Investments Commission Act 2001 of Australia and administers the Corporations Act 2001 of
Australia (Corporations Act), including the provisions governing the operation of companies in Australia, corporate fundraising,
?nancial reporting, takeovers and compulsory buyouts and external administration/insolvency.
ASIC has responsibility for the investor protection regime that applies to the provision of ?nancial services in, and into, Australia.
The regime includes licensing, conduct and disclosure provisions that apply to ?nancial services providers (including ADIs), as
well as product disclosure provisions applicable to ?nancial products. ASIC is responsible for monitoring compliance by market
and clearing and settlement facility licensees with the relevant legislative frameworks and the supervision of real time trading
on all of Australia’s domestic licensed markets.
ASIC is also responsible for (a) administering the market misconduct provisions of the Corporations Act, which cover market
manipulation, insider trading and misleading or deceptive conduct, and (b) national credit regulation which includes licensing
of all credit providers and credit service providers.
Reserve Bank of Australia
The RBA is responsible for maintaining stability of the overall ?nancial system and monetary policy, promoting the safety and
ef?ciency of the payments system (through the PSB), managing the issuance of banknotes, providing banking services for the
Australian Government and managing Australia’s of?cial reserve assets.
In exceptional circumstances, the RBA may provide liquidity support to an individual ADI if the institution was solvent and its
failure to make payments would have serious implications for the rest of the ?nancial system. In assessing solvency, the RBA
would rely on APRA’s judgment.
The RBA is also responsible for issuing ?nancial stability standards for clearing and settlement facilities and it monitors
compliance with those standards.
Federal Treasury
The Treasury is an executive arm of the Australian Government and focuses primarily on economic policy. Amongst a range
of other domestic functions, the Federal Treasury also provides advice on policy processes and reforms for the promotion
of a secure ?nancial system, sound corporate practices and safeguarding the public interest in matters such as consumer
protection and foreign investment.
Australian Competition and Consumer Commission
The ACCC has responsibility for competition policy under the Competition and Consumer Act 2010 of Australia (formerly
known as the Trade Practices Act), which prohibits anti-competitive arrangements between competitors, such as price ?xing,
market sharing and boycotts. The ACCC’s consumer protection activities complement those of Australian state and territory
consumer affairs agencies which administer separate unfair trading legislation.
Other regulatory agencies
Other primary regulatory agencies and bodies in Australia include the Australian Taxation Of?ce (ATO), the Australian Transaction
Reports and Analysis Centre (AUSTRAC), the Privacy Commissioner, and the Foreign Investment Review Board (FIRB).
46 > Australian Trade Commission Australia’s Banking Industry > 47
Summary of available operating models
Overview
Under the Banking Act, an entity must not conduct ‘banking business’ in Australia without authorisation from APRA. Banking
business includes any business that, to any extent, both (a) takes money on deposit (otherwise than as part payment for
identi?ed goods or services), and (b) makes advances of money (or conducts certain other ?nancial activities prescribed in the
Banking Act).
In addition, a person who carries on a ?nancial services business ‘in Australia’ is required to hold an Australian ?nancial
services licence (AFSL) from ASIC or enjoy the bene?t of an exemption from requirement to do so. ‘Business’ is not de?ned
under the Corporations Act, but under the common law ‘business’ imports notions of system, repetition and continuity and is to
be assessed by reference to the activities of the entity as a whole. The applicable AFSL must speci?cally cover each ?nancial
service that a person intends to provide and refer to each speci?c ?nancial product for which that service is to be provided
(see below). An AFSL will also stipulate whether the ?nancial service is to be provided to wholesale clients or both retail and
wholesale clients.
Australian Credit Licence
Under the National Consumer Credit Protection Act 2009 (Cth) all persons that engage in ‘credit activities’ in Australia are now
required to hold an Australian Credit Licence (ACL) from ASIC, or operate as a credit representative of an ACL holder, or enjoy
the bene?t of an exemption from the requirement to do so. However, the regime only applies to credit provided to individuals
predominantly for personal, domestic or household purposes or for investment in residential property. A credit activity includes:
providing credit under a credit contract or consumer lease; suggesting or assisting in relation to a particular credit contract
or consumer lease; and acting as an intermediary between a lender or lessor and a consumer (in relation to a credit contract
or lease).
A licensee must comply with disclosure and conduct obligations including, for example, being a member of an external
dispute resolution scheme, providing debtors with disclosure documents (such as ‘credit guides’) and meeting overarching
requirements such as ensuring its credit activities are engaged in ef?ciently, honestly and fairly, ensure that debtors are not
entered into credit contracts that are unsuitable to them, and do not involve con?icts of interest that are disadvantageous
to debtors.
Available Options
In summary, there are four primary options available to a foreign ?nancial institution considering the establishment of an
Australian operation:
In the case of a foreign bank:
› (a) a representative of?ce and then a branch authorised as a foreign ADI. APRA normally requires to a foreign bank
considering the establishment of an Australian branch to ?rst open a representative of?ce; or
› (b) a new Australian-incorporated subsidiary authorised as an ADI.
In the case of a foreign ?nancial institution which is not a bank:
› (c) a branch operating as a foreign non-bank ?nancial institution (NBFI); or
› (d) a new Australian-incorporated subsidiary operating as a NBFI.
Other options may be available for speci?c types of foreign ?nancial institutions (e.g., partnerships, collective investment
vehicles, co-operatives, government agencies and international organisations).
Insofar as regulatory approvals are concerned, the ?rst two options involve applying to APRA for authorisation as a
representative of?ce and/or an ADI and, except in the case of a representative of?ce, are likely to involve applying to ASIC for
an AFSL (which can be made contemporaneously with an application to APRA). The third and fourth options will only involve
applying to ASIC for an AFSL. Depending on whether regulated ‘credit activities’ is undertaken, the options will require applying
to ASIC or ACL.
Australia’s Banking Industry > 47
61. The guidelines are available at:http://www.apra.gov.au/ADI/upload/APRA_GL_ROFB_032007_ex.pdf.
62. Regulatory Guide 204 Applying for a Credit License is available at:http://www.asic.gov.au/asic/asic.nsf/byheadline/Regulatory+guides?openDocument#rg204.
63. The guidelines are available at:http://www.apra.gov.au/ADI/upload/ADI-Guidelines-11-4-08.pdf.
Summary of requirements for each option
Type of entity Process Comments
A. Representative of?ce Consent from APRA The activities of the representative of?ce are
limited to those set out in APRA’s guidelines.
61

Consent to use word ‘bank’ Required under section 66 of the Banking Act
which provides that a person must obtain consent
from APRA to assume or use the words ‘bank’,
‘banker’, ‘banking’ or cognate expressions in
Australia in connection with a ?nancial services
business carried on by that person, whether that
business is conducted within or outside Australia.
Minimum entry standards Must be authorised as a bank in its home
jurisdiction, of substance and high standing, subject
to adequate prudential standards consistent with
Basel II and have received approval from home
regulator to establish representative of?ce.
Operating conditions The activities of the representative of?ce must be
con?ned to a pure liaison of?ce. In particular, a
representative of?ce cannot grant loans, enter into
derivatives, deal in or issue securities or buy or sell
foreign exchange – see APRA’s guidelines.
Register as a foreign company Application to ASIC.
ACL from ASIC ACL or appointment as credit representative
required if undertaking ‘credit activities’ in Australia.
There is ASIC Guidance that assists applicants
apply for an ACL.
62
Must comply with ongoing conduct obligations
under the NCCP Act, including responsible lending
requirements, and provide ASIC with an Annual
Compliance Certi?cate.
B. Branch as a foreign ADI Consent from APRA Application must comply with APRA’s guidelines.
63

A branch of a foreign ADI is not permitted to accept
initial deposits (and other funds) from individuals and
non-corporate institutions of less than A$250,000.
They can, however, accept deposits and other funds
in any amount from incorporated entities, non-
residents and their employees. The branch must
also disclose that it is not subject to the depositor
protection provisions of the Banking Act.
APRA may impose conditions on the operations of
a foreign bank branch, especially during the initial
phase of operations.
Need only comply with some of APRA’s prudential
standards for foreign bank branch (see following).
48 > Australian Trade Commission Australia’s Banking Industry > 49
Type of entity Process Comments
Consent to use the word ‘bank’ Required under section 66 of the Banking
Act.
Minimum authorisation criteria Home jurisdiction requirements – must
be authorised as a bank in its home
jurisdiction, of substance and high standing,
subject to adequate prudential standards
consistent with Basel II and have received
approval from home regulator to establish
a branch.
Capital – not required to maintain endowed
capital in Australia, but the foreign ADI must
be subject to comparable capital adequacy
standards in its home jurisdiction.
Ownership – subject to limits under
the Financial Sector (Shareholdings) Act
1998 of Australia (FSSA). Direct or indirect
holdings of 15 per cent of more are subject
to a national interest test and must be
approved by the Federal Treasurer.
Prudential standards – must comply with
APRA’s prudential standards in relation to
corporate governance, securitisation and
funds management, liquidity, credit quality,
large exposures, associations with related
entities, outsourcing, business continuity
management, risk management, audit
and information and prudential reporting
(although in some cases only some of
the provisions of the prudential standards
apply to branches of foreign banks). APRA
can also impose additional, entity speci?c
prudential requirements where it believes
they are necessary.
Business plan – applicants must provide
APRA with a 3-5 year business plan and
APRA will not authorise a foreign bank
as an ADI unless the business plan
demonstrates that a real and substantial
business is to be carried on in Australia.
APRA also expects that the vast majority of
business undertaken by the foreign bank
with Australian customers (excluding non-
Australian operations of such customers)
will be undertaken through the branch
in Australia, unless there are sound and
prudent business reasons for particular
businesses or ?nancial accommodation to
be provided by branches outside Australia.
Australia’s Banking Industry > 49
Type of entity Process Comments
Register as a foreign company Application to ASIC.
AFSL from ASIC Required if the branch proposes providing certain
?nancial services (such as advice) and ?nancial
products (such as, dealing in or issuing securities,
derivatives, foreign exchange contracts) – see below.
Audit and other reports must be provided to ASIC on
an ongoing basis. There are exemptions from some
of the audit obligations where the holder of an AFSL
is a foreign ADI where equivalent reports prepared
for the overseas regulator of the foreign ADI are
lodged with ASIC.
ACL from ASIC ACL or appointment as credit representative
required if undertaking ‘credit activities’ in Australia.
There is ASIC Guidance that assists applicants apply
for an ACL.
Must comply with ongoing conduct obligations
under the NCCP Act, including responsible lending
requirements, and provide ASIC with an Annual
Compliance Certi?cate.
C. Locally-incorporated Consent from APRA Application must comply with APRA’s
subsidiary as an ADI guidelines and are subject to the same prudential
standards and legislation as local banks. A locally
incorporated ADI can undertake all types of banking
business.
APRA may impose conditions on the operations of a
newly established bank, especially during the initial
phase of operations.
Consent to use the word ‘bank’ Required under section 66 of the Banking Act.
Minimum authorisation criteria Home jurisdiction requirements – must have
received approval from home regulator to establish a
local bank subsidiary.
Capital – a minimum capital base of A$50 million.
Locally incorporated ADIs are currently required to
maintain at all times a minimum capital ratio of 8 per
cent, of which at least half must be made up of a
Tier 1 capital (i.e., a minimum Tier 1 capital ratio of
4 per cent). Newly established ADIs may be subject
to a higher minimum capital ratio in their formative
years, depending on the risk pro?le of the proposed
operations.
Ownership – subject to limits under the Financial
Sector (Shareholdings) Act 1998 of Australia (FSSA).
Direct or indirect holdings of 15 per cent of more
are subject to a national interest test and must be
approved by the Federal Treasurer.
50 > Australian Trade Commission Australia’s Banking Industry > 51
Type of entity Process Comments
Prudential standards – must comply with all
APRA’s prudential standards (including in relation
to corporate governance, capital adequacy,
securitisation and funds management, liquidity,
credit quality, large exposures, associations with
related entities, outsourcing, business continuity
management, risk management, audit and
information and prudential reporting). APRA can
also impose additional, entity speci?c prudential
requirements where it believes they are necessary.
Business plan – applicants must provide APRA
with a 3-5 year business plan.
Establish subsidiary Application to ASIC.
AFSL from ASIC Required if the ADI proposes providing certain
?nancial services (such as advice) and ?nancial
products (such as, dealing in or issuing securities,
derivatives, foreign exchange contracts) – see below.
Audit and other reports must be provided to ASIC
on an ongoing basis.
ACL from ASIC ACL or appointment as credit representative
required if undertaking ‘credit activities’ in Australia.
There is ASIC Guidance that assists applicants
apply for an ACL.
Must comply with ongoing conduct obligations
under the NCCP Act, including responsible lending
requirements, and provide ASIC with an Annual
Compliance Certi?cate.
D. Foreign subsidiary branch Register as a foreign company Application to ASIC.
AFSL from ASIC Required if the branch proposes providing certain
?nancial services (such as advice) and ?nancial
products (such as, dealing in or issuing securities,
derivatives, foreign exchange contracts) – see below.
Audit and other reports must be provided to ASIC
on an ongoing basis.
ACL from ASIC ACL or appointment as credit representative
required if undertaking ‘credit activities’ in Australia.
There is ASIC Guidance that assists applicants apply
for an ACL.
Must comply with ongoing conduct obligations
under the NCCP Act, including responsible lending
requirements, and provide ASIC with an Annual
Compliance Certi?cate.
Financial requirements for In summary, a NBFI holder of an AFSL must,
non-ADI holders of an AFSL on an ongoing basis, (i) at all times, have positive
net assets, (ii) at all times, be solvent (i.e., be able
to pay its debts as and when they become due and
payable), (iii) have suf?cient cash resources to cover
the next three months’ expenses with adequate
as a NBFI
Australia’s Banking Industry > 51
Type of entity Process Comments
cover for contingencies, (iv) if holding client money
or properties which equal or exceed A$100,000 in
value, have A$50,000 in surplus liquid funds, and (v)
if incurring adjusted liabilities or contingent liabilities
equal to or exceeding A$100,000 in providing
a ?nancial service by entering into transactions
with clients, have adjusted surplus liquid funds
of between A$50,000 and A$100,000,000 in
accordance with ASIC’s requirements.
Cannot use the word ‘bank’ APRA will not grant consent under section 66 of
the Banking Act to a NBFI.
E. Locally incorporated subsidiary Establish subsidiary Application to ASIC.
AFSL from ASIC Required if the NBFI proposes providing certain
?nancial services (such as advice) and ?nancial
products (such as, dealing in or issuing securities,
derivatives, foreign exchange contracts) –
see below.
Audit and other reports must be provided to ASIC
on an ongoing basis.
ACL from ASIC ACL or appointment as credit representative
required if undertaking ‘credit activities’ in Australia.
There is ASIC Guidance that assists applicants
apply for an ACL.
Must comply with ongoing conduct obligations
under the NCCP Act, including responsible lending
requirements, and provide ASIC with an Annual
Compliance Certi?cate.
Financial requirements fo As for a foreign subsidiary branch as a NBFI
non-ADI holders of an AFSL (see above).
Cannot use the word ‘bank’ APRA will not grant consent under section 66 of
the Banking Act to a NBFI.
The authorisation and application processes
The ?rst step in establishing a representative of?ce, foreign branch or locally incorporated ADI in Australia is to apply to APRA
for authorisation to do so and to use the words ‘bank’, ‘banker’, ‘banking’ and cognate expressions. There is a no formal
application form, but the usual practice is to submit a letter (together with attachments) that satisfy the criteria in the relevant
guidelines published by APRA.
Usually, the minimum time for APRA to approve an application for a representative of?ce is 3-6 months from submission
of an application with all required information attached. The process for authorisation as a branch of a foreign ADI or a
locally incorporated ADI is longer and can take up to 12 months (or longer in certain circumstances) from the date the initial
application is made to APRA.
The process for applying for an AFSL is called ‘eLicensing’, which is an electronic licence application process. The process
requires an applicant to identify the speci?c ?nancial services and ?nancial products it wishes to provide and the types of
customers to whom these ?nancial services and products are to be provided. A list of the supporting documentation (known
as ‘proofs’) required will be produced automatically by the eLicensing service on the basis of that information.
as a NBFI
52 > Australian Trade Commission Australia’s Banking Industry > 53
The proofs are designed to demonstrate to ASIC how the applicant meets, or will meet, the AFSL conditions. Generally, the
proofs will either be existing documents or a description of systems and processes. The proofs may be both speci?c to the
entity applying for the AFSL or may cover a corporate group.
It is not possible to commence the eLicensing process until an Australian entity is established or a foreign branch is registered
and an Australian Company Number (ACN) is received from ASIC. On lodging a complete application, ASIC aims to decide
whether to grant or vary an AFSL within 28 days of receiving a complete application – although can take longer if it involves
complex issues or information is incomplete.
The process for applying for an ACL can occur by completing and lodging an online application form and paying the
applicable application fee. The process is similar to the one outlined above in relation to an AFSL.
An applicant is not automatically entitled to a credit licence, but must meet the requirements for a credit license, including
being able to comply with the general conduct obligations under the National Credit Act, which aim to ensure that the credit
business operates properly; and satisfy the ?t and proper person requirements to engage in credit activities.
Australian ?nancial services licences
Introduction
As noted above, person who carries on a ?nancial services business ‘in Australia’ is required to hold an AFSL from ASIC or
enjoy the bene?t of an exemption from requirement to do so.
Although there are numerous exemptions available for particular ?nancial services and/or ?nancial products, there are few
exemptions of general application. ASIC has provided a number of class order exemptions of general application for some
regulated foreign ?nancial institutions which operate in jurisdictions which have a similar level of investor protection to Australia.
These exemptions only permit ?nancial services to provided to ‘wholesale clients’ (see below), are subject to some other
conditions and involve submitting a standard form deed of reliance to ASIC and providing certain information to ASIC every
six months.
What is a ?nancial service?
A person provides a ?nancial service if they engage in certain activities, which include:
› (a) providing ?nancial product advice;
› (b) dealing in a ?nancial product;
› (c) making a market for a ?nancial product;
› (d) operating a registered managed investment scheme (i.e., collective investment vehicles); and
› (e) providing a custodial or depository service.
What is a ?nancial product?
Financial product is de?ned in general terms and there are speci?c inclusions and exclusions. The general de?nition is that a
‘?nancial product’ is any facility through which a person:
› (a) makes a ?nancial investment;
› (b) manages ?nancial risk; or
› (c) makes non-cash payments.
This applies even if the facility is acquired for some other purpose.
The speci?c inclusions to the de?nition of ‘?nancial product’ illustrate the wide scope of the concept. Speci?c inclusions are
equity and debt securities, interests in managed investment schemes, derivatives, foreign exchange contracts, most insurance
contracts, most superannuation (i.e., pension) products, most deposit taking facilities provided by Australian ADIs and
government debenture and bond issues.
The speci?c exclusions to the de?nition are generally products that are more suitably regulated under some other regime
(such as credit facilities and a facility for the exchange and settlement of non cash payments betwen providers of non cash
payment facilities).
Australia’s Banking Industry > 53
Loans in Australia can be structured as a ‘credit facility’ or, for tax reasons, as an issue of ‘debentures’ (i.e., a type of debt
security). If the loan is a bilateral or syndicated ‘credit facility’, then there should be no particular licensing requirements as
credit facilities are not ?nancial products for the purposes of the AFSL regime. However, if the loan is structured as an issue of
‘debentures’, which is a ?nancial product, then it may be necessary for a lender to hold an AFSL. More structured transactions
may involve derivatives, foreign exchange contracts (excluding most spot transactions) or other ?nancial products, which will
also require the provider of those ?nancial products to hold an AFSL.
Retail and wholesale clients
An AFSL will also stipulate whether the ?nancial service is to be provided to wholesale clients or both retail and wholesale
clients. In summary, a person is a ‘wholesale client’ if at least one of the following four tests applies (all other persons are retail
clients):
› (a) a value test: the consideration payable for the investment is at least A$500,000 (or such other amount set by regulation);
› (b) a business test: the product or service is provided in connection with a business that is not a small business (this
normally means at least 20 employees);
› (c) an individual wealth test: the client’s net assets are at least A$2.5 million or income for each of the last two years is at
least A$250,000 (or such other amounts set by regulation); and
› (d) a professional investor (as broadly de?ned in the Corporations Act) test.
Other considerations
Privacy laws
The Privacy Act 1988 of Australia (‘Privacy Act’) requires that ‘personal information’ must not be collected unless the person
concerned either consents or is informed why it is being collected, who will use it, and how the person may access it and
correct it, if necessary.
Further, the Privacy Act requires that such ‘personal information’ not be used for a purpose other than that for which it was
collected and not be disclosed to anyone else unless the person concerned has consented or the law requires it.
Anti-money laundering and similar laws
AUSTRAC acts as the regulator for both the Financial Transactions Report Act 1988 of Australia and the Anti-Money
Laundering and Counter-Terrorism Financing Act 2006 of Australia. The reporting of ?nancial transactions, including:
› (a) cash transactions of A$10,000 or more or the foreign currency equivalent;
› (b) suspicious transactions; and
› (c) international funds transfer instructions.
is required, as well as the veri?cation of the identity of persons who are signatories to accounts. Financial institutions are
required to establish a compliance plan to ensure that the reporting and other obligations under both Acts are satis?ed.
New laws to change the way to take security in Australia
The Personal Property Securities Act 2009 of Australia (‘PPSA’) commenced on 15 December 2009, but will not apply until a
date to be announced in October 2011.
Once the PPSA begins to apply, it will have a retroactive effect on security interests and security agreements arising before
that time. The PPSA will establish a national system for the registration of security interests in personal property (i.e., all
property other than land), whether given by a company or a natural person, together with new rules for the creation, priority
and enforcement of security interests in personal property.
It will radically alter many long-standing rules relating to title and the taking of security and will result in signi?cant changes to
secured transactions and lending practices. It extends the concept of security to capture many transaction not now registrable
or considered to be a security interest, such as assignments of receivables, leases of property, title retention arrangements
and ?awed asset arrangements.
54 > Australian Trade Commission Australia’s Banking Industry > 55
This section summarises the Australian taxation laws that are most likely to apply when a foreign ?nancial institution sets up an
Australian operation. However, a full discussion of all relevant issues is beyond the scope of this publication and it is necessary
to seek independent tax advice in all cases.
Australia has also entered into tax treaties with over forty countries to prevent double taxation and allow co-operation between
Australia and overseas authorities in enforcing their respective tax laws. These treaties are commonly referred to as ‘double
tax agreements’ or ‘DTAs’ and can apply when a foreign ?nancial institution from a relevant country sets up an Australian
operation.
Summary
The following table summarises the key Australian tax considerations in relation to each of the alternative business structures
that could be adopted when establishing a ?nancial institution in Australia.
Taxation
Type of entity
1. Representative of?ce
Activities limited solely to liaison and
marketing activities, and no banking
business conducted in Australia.
2. Branch authorised as a foreign ADI
Key tax considerations
Taxation of business pro?ts
No signi?cant Australian tax issues should generally arise on the basis
that:
› The foreign bank should not be held to be carrying on business
through a permanent establishment in Australia; and
› The foreign bank should not otherwise be deemed to have a taxable
presence in Australia.
Taxation treatment of funding options
Not generally applicable.
Taxation of business pro?ts
The Australian taxable income of the branch as a foreign ADI will
generally be subject to Australian tax at the ordinary corporate rate
(currently 30 per cent).
Taxation treatment of funding options
The funding of the branch will generally be treated in the following way:
› Interest withholding tax (IWT) will generally apply to offshore inter-
branch funding at the rate of 5 per cent.
1
› IWT will also generally apply to other offshore funding at the rate of 10
per cent
1
, subject to relief under an applicable DTA (e.g., exemption for
qualifying ?nancial institutions).
› Exemption from IWT may be available in relation to publicly offered
funding from unrelated lenders (commonly referred to as the section
128F exemption).
1. Refer to the proposed reduction in IWT that follows.
Australia’s Banking Industry > 55
Type of entity
3. Locally-incorporated subsidiary
authorised as an ADI, foreign subsidiary
branch operating as a foreign non-bank
?nancial institution (NBFI), or locally
incorporated subsidiary operating as
a NBFI
Key tax considerations
Taxation of business pro?ts
The Australian taxable income of each entity will generally be subject to
Australian tax at the ordinary corporate rate (currently 30 per cent).
Taxation treatment of funding options
The funding of each entity will generally be treated in the following way:
› IWT will generally apply to offshore funding at the rate of 10 per cent
1
,
subject to relief under an DTA (e.g., exemption for qualifying ?nancial
institutions).
› Exemption from IWT may be available in relation to publicly offered
funding from unrelated lenders (commonly referred to as the section
128F exemption).
Taxation of business pro?ts
The business pro?ts of an Australian branch or an Australian subsidiary of a foreign ?nancial institution will generally be subject
to Australian tax at the ordinary corporate rate (currently 30 per cent). The Government has announced that it intends to reduce
the corporate tax rate to 29 per cent from the 2013-14 income year.
In contrast, a foreign ?nancial institution which merely carries on activities of a preparatory or auxiliary nature in Australia
(e.g., through a representational of?ce) will not generally be liable to pay Australian income tax, provided that the activities
of the of?ce are limited solely to liaison and marketing activities, and the of?ce does not conduct any banking business in
Australia.
Taxation treatment of funding options
When is interest withholding tax payable?
A foreign ?nancial institution that has an Australian subsidiary or an Australian branch may be subject to IWT. Broadly, under
Australian tax legislation, interest that is paid to a non-resident is generally subject to withholding tax where the payment is
made by an Australian resident or a non-resident acting through an Australian permanent establishment (e.g., an Australian
branch). No IWT is generally imposed on domestic payments of interest (including payments made to foreign banks which are
in receipt of the funds through a permanent establishment in Australia).
IWT is imposed at the rate of 10 per cent, but may be reduced depending on the terms of any applicable DTA between
Australia and the jurisdiction of the recipient.
Exemptions from IWT
Australian tax law does provide for a number of exemptions to IWT. These include, where:
› interest is paid on publicly offered debentures, non-equity shares, certain other prescribed debt interests and certain
syndicated loans (commonly referred to as the section 128F exemption);
› interest payments qualify for exemption under an applicable DTA (e.g., exemption for qualifying ?nancial institutions);
› interest is paid by offshore banking units (OBU) in relation to certain borrowings; and
› the payee is speci?cally exempt from IWT (e.g., the payee is exempt from tax in both Australia and home country, or the
payee is an exempt foreign pension fund).
1. Refer to the proposed reduction in IWT that follows.
56 > Australian Trade Commission Australia’s Banking Industry > 57
The exemptions that are most likely to apply to a foreign ?nancial institution acting through an Australian subsidiary or an
Australian branch are outlined below.
Exemption for certain publicly offered debentures (section 128F exemption)
In broad terms, under Australian taxation law, interest paid on publicly-offered debentures, non-equity shares and prescribed
debt instruments is exempt from IWT if the following conditions are met:
› (a) the issuer is a company which is a resident of Australia (or a non-resident carrying on business through an Australian
branch) when it issues debt instruments and at the time when interest is paid;
› (b) the debt instruments were issued under an offer which satis?es the ‘public offer’ test (which is de?ned under Australian
tax legislation); and
› (c) the issuer does not know, or have reasonable grounds to suspect, that:
(i) at the time of issue the debt instruments would be acquired by an ‘associate’ of the issuer; and
(ii) at the time of the payment of interest, the payee is an ‘associate’ of the issuer.
Additional requirements apply before interest paid on certain syndicated loans will be exempt from IWT.
Exemptions under Australia’s new DTAs
The Australian Government has entered into new DTAs (New Treaties) with a number of countries (Speci?ed Countries) which
contain certain exemptions from IWT. For example, New Treaties have been concluded with each of Finland, France, Japan,
New Zealand, Norway, South Africa, the United Kingdom and the United States.
Broadly, an exemption from IWT is available in respect of interest derived by:
› (a) the government and certain governmental authorities and agencies of the Speci?ed Country; and
› (b) a ‘?nancial institution’ which is a resident of a Speci?ed Country and which is unrelated to and dealing wholly
independently with the payer of interest.
64
This includes interest payments to a bank or other entity that derives most of
its pro?ts by carrying on a business of raising and providing ?nance.
Notional borrowing by an Australian branch of a foreign bank
Where a foreign bank conducts business in Australia through an Australian branch, special taxation rules will apply in relation
to certain ?nancing transactions between the foreign bank (e.g., head of?ce) and its Australian branch.
Broadly, where the foreign bank makes an amount available for use by the Australian branch and the amount is recorded in
the branch’s accounting records as having been provided by the bank to the branch, the law treats the Australian branch and
the foreign bank as separate legal entities and the Australian branch is taken to have borrowed the amount from the foreign
bank. Where the Australian branch records a payment of interest in respect of this notional borrowing, the notional interest is
deemed to have been paid to the foreign bank and the branch and is subject to IWT at the reduced rate of 5 per cent.
This special tax treatment does not apply to locally incorporated subsidiaries of a foreign bank. Accordingly, funding
transactions between a foreign bank and its Australian subsidiary may still be subject to IWT at the usual rate of 10 per cent.
Deductibility of IWT
Generally, a branch or subsidiary of a foreign ?nancial institution which pays interest should be entitled to a tax deduction
in respect of the interest paid when calculating its Australian taxable income. This deduction should be gross of any IWT
imposed on the interest payments. If the payer of interest was required to ‘gross-up’ payments to the payee, the payer should
also be entitled to a tax deduction for the grossed-up amount. No deduction will generally arise to the extent that there is a
failure to withhold an amount on account of IWT.
Phasing down Australian IWT for ?nancial institutions
The Australian Government announced in the 2010-11 Federal Budget that it would phase down the IWT payable by ?nancial
institutions on most interest paid on offshore borrowings, including when an Australian subsidiary or an Australian branch of a
foreign ?nancial institution pays interest on borrowings from their overseas parent.
64. However, interest paid under a back-to-back loan or an economically equivalent arrangement will not qualify for this exemption.
Australia’s Banking Industry > 57
The following table summarises the current and proposed IWT position:
Special treatment for offshore banking units
Entities that are OBUs are effectively subject to a reduced tax rate of 10 per cent on eligible income (rather than at the general
corporate tax rate of 30 per cent) and are not required to pay IWT on certain borrowings.
An entity becomes an OBU when its OBU status is declared by the Treasurer in a Gazette notice. Generally, OBU status is
generally available for ADIs, state banks, registered life insurance companies, certain dealers in foreign exchange, and funds
management companies.
A recent report by the Australian Financial Centre Forum – Australia as a Financial Centre Forum: Building on our strengths
recommended that the Government improve Australia’s attractiveness as a ?nancial hub by publicising the OBU regime more
widely and by simplifying the process for obtaining OBU status.
Thin capitalisation
Australia’s thin capitalisation rules seek to limit the amount of debt used to fund Australian operations or investments. In very
broad terms, this is achieved by disallowing debt deductions (such as interest payments) that an entity can claim against
Australian assessable income where the entity is too thinly capitalised.
The thin capitalisation rules are complex and need to be considered on a case-by-case basis; however, they are normally
manageable for ?nancial institutions which operate in Australia.

Type of borrowing Current IWT position From 2013-14 From 2014-15
Financial institution borrows from a foreign 0% 7.5% 5%
?nancial institution (where not exempt under a DTA) (aspirational target of zero)
Foreign bank branch borrows from overseas head of?ce 5% 2.5% Exempt
Financial institution borrows from offshore retail deposits 10% 7.5% 5%
(proceeds used and traced to Australian operations) (aspirational target of zero)
Financial institution borrows in a section 128F compliant manner Exempt Exempt Exempt
Offshore banking unit (borrows and on-lends offshore) Exempt Exempt Exempt
Financial institution borrows from non-resident retail deposits 10% 10% 10%
held in Australia
Future IWT position
Source: Treasurer’s press release number 035/2010 issued on 11 May 2010
58 > Australian Trade Commission Australia’s Banking Industry > 59
Useful Links
Primary Regulators
› Australian Prudential Regulation Authority www.apra.gov.au
› Australian Securities and Investments Commission www.asic.gov.au
› Reserve Bank of Australia www.rba.gov.au
Australian Government
› Australian Bureau of Statistics www.abs.gov.au
› Australian Competition and Consumer Commission www.accc.gov.au
› Australian Taxation Of?ce www.ato.gov.au
› Australian Trade Commission www.austrade.gov.au
› Australian Transaction Reports and Analysis Centre www.austrac.gov.au
› Federal Treasury www.treasury.gov.au
› Foreign Investment Review Board www.?rb.gov.au
› Future Fund www.futurefund.gov.au
› MoneySmart www.moneysmart.gov.au
Other
› Abacus (credit union and building society industry body) www.abacus.org.au
› Alternative Investment Management Association www.aima-australia.org
› Association of Superannuation Funds of Australia www.superannuation.asn.au
› Australian Accounting Standards Board www.aasb.com.au
› Australian Bankers Association www.bankers.asn.au
› Australian Equipment Lessors Association www.aela.asn.au
› Australian Finance Conference www.afc.asn.au
› Australian Financial Markets Association www.afma.com.au
› Australian Institute of Superannuation Trustees www.aist.asn.au
› Australian Payments Clearing Association www.apca.com.au
› Australian Securities Exchange www.asx.com.au
› Australian Securitisation Forum www.securitisation.com.au
› Australian Private Equity & Venture Capital Association www.avcal.com.au
› Financial Planning Association www.fpa.asn.au
› Financial Services Council www.ifsa.com.au
› Financial Services Institute of Australasia www.?nsia.com
› Fund Executives Association Ltd www.feal.asn.au
Australia’s Banking Industry > 59

Appendix A – Banking Institutions
65. Bank of Western Australia Ltd is a wholly owned subsidiary of the Commonwealth Bank of Australia.
Domestic Banks – Four Major Banks
Australia and New Zealand Banking Group Ltd
Commonwealth Bank of Australia
National Australia Bank Ltd
Westpac Banking Corporation
Domestic Banks – Other
AMP Bank Ltd
Bank of Queensland Ltd
Bank of Western Australia Ltd
65

Bendigo and Adelaide Bank Ltd
Macquarie Bank Ltd
Members Equity Bank Pty Ltd
Rural Bank Ltd
Suncorp-Metway Ltd
Foreign Bank Subsidiaries
Arab Bank Australia Ltd
Bank of China (Australia) Ltd
Bank of Cyprus Australia Ltd
Beirut Hellenic Bank Ltd
Citigroup Pty Ltd
HSBC Bank Australia Ltd
ING Bank (Australia) Ltd
Investec Bank (Australia) Ltd
Rabobank Australia Ltd
Foreign Bank Representative Of?ces
Agricultural Bank of China
Banco Bilbao Vizcaya Argentaria S.A.
Banco Santander, S.A.
Bank Hapoalim B.M.
Bank of Baroda
Bank of Communications Co., Ltd.
Bank Leumi Le-Israel BM
Bank of Valletta p.l.c
China Construction Bank Corporation
Commerzbank AG
Credit Industriel et Commercial
National Bank of Greece SA
Saxo Bank A/S
The Bank of Nova Scotia
The People’s Bank of China
Union Bank of India
Wells Fargo Bank, National Association
Foreign Bank Branches
Bank of America, National Association
Bank of China Ltd
Bank of Scotland plc
Barclays Capital
BNP Paribas
China Construction Bank Corporation
Citibank, N.A.
Credit Suisse AG
Deutsche Bank Aktiengessellschaft
First Commercial Bank
Industrial and Commercial Bank of China Ltd
ING Bank N.V
JPMorgan Chase Bank, National Association
Lloyds TSB Bank plc
Mega International Commercial Bank Co., Ltd.
Mizuho Corporate Bank, Ltd.
Oversea-Chinese Banking Corporation Ltd
Rabobank Nederland
Royal Bank of Canada
Société Générale
Standard Chartered Bank
State Bank of India
State Street Bank and Trust Company
Sumitomo Mitsui Banking Corporation
Taiwan Business Bank
The Bank of New York Mellon
The Bank of Tokyo-Mitsubishi UFJ, Ltd
The Hongkong and Shanghai Banking Corporation Ltd
The Northern Trust Company
The Royal Bank of Scotland N.V.
The Royal Bank of Scotland PLC
The Toronto-Dominion Bank
UBS AG
United Overseas Bank Ltd
WestLB AG
60 > Australian Trade Commission Australia’s Banking Industry > 61

Appendix B – Credit Unions and Building Societies
Credit Unions
Alliance One Credit Union Ltd
Allied Members Credit Union Ltd
AMP Credit Union Ltd
Australian Central Credit Union Ltd
Australian Country Credit Union Ltd (trading as Reliance
Credit Union)
Australian Defence Credit Union Ltd
AWA Credit Union Ltd
Bananacoast Community Credit Union Ltd
Bankstown City Credit Union Ltd
Berrima District Credit Union Ltd
Big Sky Credit Union Ltd
CAPE Credit Union Ltd
Central Murray Credit Union Ltd
Central West Credit Union Ltd
Circle Credit Co-operative Ltd
Coastline Credit Union Ltd
Collie Miners Credit Union Ltd
Community Alliance Credit Union Ltd
Community CPS Australia Ltd
Community First Credit Union Ltd
Country First Credit Union Ltd
Credit Union Australia Ltd
Credit Union SA Ltd
Defence Force Credit Union Ltd
Dnister Ukrainian Credit Co-operative Ltd
EECU Ltd
Electricity Credit Union Ltd
Encompass Credit Union Ltd
Family First Credit Union Ltd
Fire Brigades Employees’ Credit Union Ltd
Fire Service Credit Union Ltd
Fire?ghters & Af?liates Credit Co-operative Ltd
First Choice Credit Union Ltd
First Option Credit Union Ltd
Fitzroy & Carlton Community Credit Co-Operative Ltd
Ford Co-operative Credit Society Ltd
Gateway Credit Union Ltd
Geelong & District Credit Co-operative Society Ltd
Gold?elds Credit Union Ltd
Goulburn Murray Credit Union Co-operative Ltd
Heritage Isle Credit Union Ltd
Holiday Coast Credit Union Ltd
Horizon Credit Union Ltd
Hunter United Employees’ Credit Union Ltd
Industries Mutual Credit Union Ltd
Intech Credit Union Ltd
La Trobe University Credit Union Co-Operative Ltd
Laboratories Credit Union Ltd
Latvian Australian Credit Co-operative Society Ltd
Lithuanian Co-operative Credit Society “Talka” Ltd
Lysaght Credit Union Ltd
MacArthur Credit Union Ltd
Macquarie Credit Union Ltd
Manly Warringah Credit Union Ltd
Maritime, Mining & Power Credit Union Ltd
MCU Ltd
MECU Ltd
Melbourne University Credit Union Ltd
MemberFirst Credit Union Ltd
MyState Financial Ltd
New England Credit Union Ltd
Newcom Colliery Employees Credit Union Ltd
Northern Inland Credit Union Ltd
Nova Credit Union Ltd
Old Gold Credit Union Co-operative Ltd
Orange Credit Union Ltd
Phoenix (N.S.W.) Credit Union Ltd
Plenty Credit Co-operative Ltd
Police & Nurses Credit Society Ltd
Police Association Credit Co-operative Ltd
Police Credit Union Ltd
Pulse Credit Union Ltd
Qantas Staff Credit Union Ltd
Queensland Country Credit Union Ltd
Queensland Police Credit Union Ltd
Queensland Professional Credit Union Ltd
Queensland Teachers’ Credit Union Ltd
Queenslanders Credit Union Ltd
Australia’s Banking Industry > 61
Railways Credit Union Ltd
Resources Credit Union Ltd
R.T.A. Staff Credit Union Ltd
Select Credit Union Ltd
Service One Credit Union Ltd
SGE Credit Union Ltd
Shell Employees’ Credit Union Ltd
South West Slopes Credit Union Ltd
Southern Cross Credit Union Ltd
South-West Credit Union Co-Operative Ltd
Summerland Credit Union Ltd
Sutherland Credit Union Ltd
Swan Hill Credit Union Ltd
Sydney Credit Union Ltd
Tartan Credit Union Ltd
Teachers Credit Union Ltd
The Broken Hill Community Credit Union Ltd
The Capricornian Ltd
The Gympie Credit Union Ltd
The Police Department Employees’ Credit Union Ltd
The University Credit Society Ltd
Traditional Credit Union Ltd
TransComm Credit Co-operative Ltd
Victoria Teachers Credit Union Ltd
Wagga Mutual Credit Union Ltd
Warwick Credit Union Ltd
WAW Credit Union Co-Operative Ltd
Woolworths Employees’ Credit Union Ltd
Wyong Council Credit Union Ltd
Building Societies
ABS Building Society Ltd
B & E Ltd
Greater Building Society Ltd
Heritage Building Society Ltd
Hume Building Society Ltd
IMB Ltd
Lifeplan Australia Building Society Ltd
Maitland Mutual Building Society Ltd
Newcastle Permanent Building Society Ltd
The Rock Building Society Ltd
Wide Bay Australia Ltd
62 > Australian Trade Commission Australia’s Banking Industry > 63
Bank of China
In 1985, Bank of China recommenced its operations in Australia and has since set up its Australian headquarters in Sydney’s
York Street and established seven branches in Sydney, Melbourne, Perth and Brisbane. In 2005, Bank of China (Australia)
Limited, the Australian subsidiary of Bank of China, was established in Sydney.
The bank offers a wide range of corporate and personal banking services in Australia and targets the local Chinese
community, Chinese students studying in Australia, Chinese companies investing in Australia, and Australian businesses with
trade and investment links to China.
› www.bocau.com.au
Citibank
Citibank’s presence in Australia extends back to 1971. The organisation was the ?rst foreign bank to be granted a banking
license in 1985 and today provides consumer, corporations, governments and institutions a full range of ?nancial products
and services. Citi, the parent company of Citibank in Australia, employs approximately 2,300 staff, and services over 1 million
customers in Australia.
Citibank is one of the largest foreign banks servicing Australia’s retail banking sector. In Australia, Citibank holds approximately
A$6.2 billion in retail deposits, and has more than A$13 billion in loans and advances to households. Citibank is one of the largest
credit card issuers in Australia, ranking ?fth in terms of credit card loans outstanding, just behind the big four domestic banks.
› www.citibank.com.au
HSBC
HSBC operates through a network of 35 branches and of?ces in Australia. HSBC ?rst entered Australia through the
establishment of a ?nance company in 1965 and obtained a full banking license in 1986. With retail deposits as at September
2010 of approximately A$3.9 billion and A$7.3 billion in loans and advances to households, HSBC is the third largest foreign
bank competitor in the retail banking sector.
HSBC offers a full range of consumer, commercial and institutional banking services. They target their retail services to high-
end expatriates and customers with continued links between Asia and Australia.
› www.hsbc.com.au
ING DIRECT
ING DIRECT launched in Australia in 1999 and pioneered branchless banking. It has grown to become the ?fth largest retail
bank in Australia and largest foreign bank competitor in the retail banking sector. ING DIRECT has approximately 1.4 million
customers, A$17 billion in retail deposits and A$36.7 billion in loans and advances to the household sector.
The bank ?rst entered Australia with an online interest earning savings deposit account. Most recently, ING DIRECT expanded
its deposit service offering to include an everyday transaction account – Orange Everyday. ING DIRECT also offers home loans
and business banking and deposit services. Headquartered in Sydney, ING DIRECT employs some 900 people in Australia.
› www.ingdirect.com.au

Appendix C – Foreign Retail Banks in Australia
Australia’s Banking Industry > 63
Rabobank
Rabobank ?rst entered Australia in 1994, through the acquisition of Primary Industry Bank of Australia, which was renamed
Rabobank Australia in 2003, the same year Rabo acquired Lend Lease Agro Business in Australia. Rabobank operates through
51 branches throughout Australia and targets primarily the rural and agricultural sector.
The bank entered the retail banking space in May 2007 with the launch of its RaboPlus internet bank, which was rebranded
RaboDirect in May 2010. RaboDirect offers a range of high interest savings, term deposits and online access to a selection of
wholesale managed funds. As at September 2010, Rabobank held A$1.8 billion in retail deposits.
› www.rabodirect.com.au

64 > Australian Trade Commission Australia’s Banking Industry > 65
Australia and New Zealand Bank
ANZ has some 1,346 branches and of?ces worldwide with operations in Australia, New Zealand, 15 Asian markets (including
the Middle East), 12 Paci?c countries, Europe (London and Frankfurt) and New York. The focus of its current growth strategy is
the Asia-Paci?c, with the aim of becoming a ‘super-regional bank’ increasing its presence in the region to around 20 per cent
of earnings by 2012.
To achieve this vision, ANZ has been investing signi?cantly in the region, building branch networks in Indonesia, Vietnam and
China through a combination of organic growth and strategic acquisition. The bank recently acquired select businesses from
Royal Bank of Scotland in Singapore, Taiwan, Indonesia, Philippines and Hong Kong.
In China, ANZ has seven branches and sub branches and holds the maximum allowable investments in two signi?cant
Chinese banks: Shanghai Rural Commercial Bank and Bank of Tainjin. ANZ anticipates having twenty outlets open by 2013.
Its China expansion strategy received a boost when ANZ was granted local incorporation approval in September 2010. This
means ANZ can apply for a renminbi licence and will allow the bank to provide domestic retail and business banking services
along with foreign currency products to its institutional clients. In Taiwan, the bank has grown from one branch with a small
institutional client base in 2008 to a pan-island network of 22 branches serving 1 million clients. In Hong Kong, ANZ has
grown from a single branch serving institutional and private banking clients in 2008 to having six branches with full retail,
wealth, private banking, institutional and commercial banking capabilities.
ANZ is also the leading bank within the Paci?c region, with operations in 12 Paci?c countries. The bank was granted a
universal bank licence in the Philippines in January 2010 and has 28 branches across 11 cities with almost 1,000 employees
in Indonesia. In the greater Mekong region (Vietnam, Cambodia and Laos) the bank’s aim is to become the leading foreign
bank. ANZ currently has 11 of?ces, 100 ANZ branded ATMS and 1,000 shared ATMs, as well as an extensive EFTPOS network
and call centre in Vietnam. In Cambodia, ANZ has a 55 per cent owned joint venture with 18 branches, and 124 ATMs serving
90,000 customers; and in Laos, ANZ is the only international bank, with three branches and nine ATMs.
› www.anz.com.au
Commonwealth Bank of Australia
The Commonwealth Bank of Australia (CBA) has operations and investments globally; however, the bulk of its international
growth initiatives are centred in the Asia-Paci?c region, primarily in China, Indonesia, Vietnam and India. The Bank’s Asian
Growth strategy is focused on building long-term growth opportunities in the areas of banking, wealth and insurance/
bancassurance, in emerging markets where there are young and well-educated populations, strong economic growth and
strong, cultural and trade linkages with Australia.
In Europe, the bank has approximately 100 employees and has had a branch in the UK since 1913. CBA established a second
European branch in Malta in 2005, focused primarily on commercial banking solutions in infrastructure and utilities, corporate
lending, and asset ?nance. In North America, the bank’s New York branch was established in 1977 and focuses on corporate
banking activities in infrastructure, natural resources and global market services (foreign exchange, derivatives, commodities,
?xed income products, money markets and private placements).
In the Asia-Paci?c, CBA has operations in China, Hong Kong, Indonesia, Japan, Singapore, Vietnam and India. The bank’s
Indonesian subsidiary employs more than 1600 people and has been operating for more than 14 years. It offers retail banking
services and foreign exchange through 84 branches and 100 ATMs across 22 Indonesian cities. CBA established its Ho
Chi Minh City branch in 2008 after having had a representative of?ce in Hanoi since 1994. The bank provides retail banking
services (savings accounts, loans, money transfers) in Vietnam, as well as some business banking and international trade
?nance. In 2010, CBA also made a 15 per cent investment in local Vietnamese bank, VIB.
Appendix D – International Expansion
of Australia’s Largest Banks
Australia’s Banking Industry > 65
In China, CBA has had representation in Beijing since 1994 and in 2010 opened its ?rst corporate and institutional branch in
Shanghai. The bank has a 20 per cent investment in two Chinese city commercial banks (Qilu Bank and Bank of Hangzhou).
Also, in 2010, CBA entered into a life insurance joint venture partnership called BoCommLife with China’s ?fth largest bank,
Bank of Communications.
CBA has been in Hong Kong since 1986 and in Singapore since 1982. In both markets, CBA focuses on servicing
multinationals from Australia and New Zealand, Asian institutional clients, and offers private banking services for expatriates
and local professionals. The Tokyo branch was established in 1986 and conducts wholesale business activities, CBA’s newest
international branch was of?cially opened in Mumbai, India, in August 2010 and is a fully functional commercial banking
operation.
› www.cba.com.au
Macquarie Group
Australian-headquartered Macquarie Group describes itself as a ‘global provider of banking, ?nancial, advisory, investment
and funds management services’. The Group has steadily grown its international activities, with a network of more than 70
of?ces in 28 countries and in recent years has consistently generated more than 50 per cent of its operating income from
international sources. As at 31 March 2010, Macquarie had more than 14,600 staff, with approximately 50 per cent of those
located offshore, and $A326 billion of assets under management.
Macquarie holds a number of leading market positions in the various markets in which it operates. It is a top ten institutional
equities broker based on global stock coverage, and has been a top two ranked manager of Hong Kong initial public offerings
since 2008, and is ranked in the top ?ve North American physical gas marketers. Macquarie has more than one million retail
clients and 200,000 specialist ?nance and leasing clients worldwide.
Macquarie has grown through a mix of organic growth and selective acquisitions. In 2009-10, Macquarie made several North
American acquisitions, including Constellation’s downstream natural gas trading business, Fox-Pitt Kelton Cochran, Caronia
Waller, Tristone Capital, Delaware Investments and Blackmont Capital. Macquarie also acquired the cash equities and equity
derivatives operations of Sal. Oppenheim in Europe.
Organic growth initiatives include the global build-out of the institutional cash equities platform, the expansion of debt capital
markets activities into the US and Europe, and the commencement of physical oil trading in Singapore.
› www.macquarie.com.au
National Australia Bank
National Australia Bank (NAB) is a ?nancial services organisation comprising nearly 40,000 people, more than 1800 branches
and service centres, and more than 450,000 shareholders. NAB provides products, advice and services through the major
Australian franchise and businesses in the United Kingdom, New Zealand, the United States and Asia.
NAB’s international strategy has focused more signi?cantly on the New Zealand, UK and US markets. The bank’s UK
franchises, Clydesdale Bank and Yorkshire Bank, provide retail, business and corporate banking services to more than 2.7
million customers across the UK. Its US company, Great Western Bank, has more than 900 employees and services 300,000
customers through 125 branches across seven US States, primarily in the mid-west. Great Western Bank focuses on retail
banking, business banking and agribusiness banking.
In New Zealand, NAB has BNZ and BNZ Partners who provide retail, business and agribusiness banking and insurance
services to more than one million customers across New Zealand. BNZ has pioneered a number of innovative concepts
designed to provide customers with a retail, rather than a traditional banking, experience. New concept stores, mobile banking
carts and trailers, and ‘Out of the Box’ packaged customer solutions have all been introduced.
National Australia Bank in Asia has banking operations in Hong Kong, Singapore and Japan as well as representative of?ces in
China and India. In China, NAB recently applied for its ?rst branch licence in Shanghai.
› www.nab.com.au
66 > Australian Trade Commission Australia’s Banking Industry > 67
Westpac
Westpac’s international operations focus on supporting Australian and New Zealand customers in foreign markets, and
providing a gateway for foreign ?rms and individuals interested in Australia and New Zealand. Westpac Institutional Bank (WIB)
delivers a broad range of ?nancial services to commercial, corporate, institutional and government customers either based in,
or with interests in, Australia and New Zealand.
Westpac’s Asian operations are led out of Singapore, where it offers a full suite of private, corporate and institutional banking
services. Westpac has a branch licence in Hong Kong, Singapore and Shanghai and representative of?ces in Beijing, Jakarta
and Mumbai. There is an extensive Westpac network throughout the South Paci?c with a presence in seven island nations.
The bank has twenty branches in Fiji, 16 in Papua New Guinea and smaller number of branches in the Cook Islands, Samoa,
Tonga, Soloman Islands and Vanuatu.
In Australia, Westpac Retail and Business Banking (WRBB) is responsible for sales, marketing and customer service for around
5 million consumer and SMEs enterprise customers within Australia under the Westpac and RAMS brands.
In December 2008, Westpac merged with St.George Bank Limited adding 2.6 million St.George customers to the group.
St.George bank now operates as an operating division within the wider multi-branded Westpac Group.
› www.westpac.com.au

Australia’s Banking Industry > 67
Legal
› Allens Arthur Robinson www.aar.com.au
› Allen & Overy www.allenovery.com
› Baker & McKenzie www.bakermckenzie.com
› Blake Dawson www.blakedawson.com
› Clayton Utz www.claytonutz.com
› Corrs Chambers Westgarth www.corrs.com.au
› DLA Piper www.dlapiper.com
› Freehills www.freehills.com
› Gadens www.gadens.com.au
› Gilbert and Tobin www.gtlaw.com.au
› Hall and Wilcox Lawyers www.hallandwilcox.com.au
› Henry Davis York www.hdy.com.au
› Holding Redlich www.holdingredlich.com.au
› HWL Ebsworth www.hwlebsworth.com.au
› Maddocks www.maddocks.com.au
› Mallesons Stephen Jaques www.mallesons.com
› Middletons www.middletons.com.au
› Minter Ellison Lawyers www.minterellison.com
› Norton Rose www.nortonrose.com
Accounting/Tax
› BDO Kendalls www.bdo.com.au
› Deloitte www.deloitte.com.au
› Ernst & Young www.ey.com
› Grant Thornton www.grantthornton.com.au
› HLB Judd Mann www.hlb.com.au
› Horwath www.horwath.com.au
› KPMG www.kpmg.com
› Moore Stephens www.moorestephens.com
› Pitcher Partners www.pitcher.com.au
› PricewaterhouseCoopers www.pwc.com
› PKF www.pkf.com.au
› WHK Group www.whk.com.au

Appendix E – Selected Australian Legal and
Accounting/Tax Advisors in Financial Services
68 > Australian Trade Commission Australia’s Banking Industry > 69
Appendix F – Infrastructure Australia’s
Reform and Investment Priorities
Development Project Project Estimated
Category Area Name State Cost (A$m)
Early Stage Transforming our cities Melton Rail Line Duplication VIC 1,300
and Electri?cation (VIC, A$1,300m)
Sydney’s Future Public NSW n/a
Transport Network (NSW; n/a)
Gold Coast City Rail QLD 2,875
(SE Qld Mayors; A$2,875m)
North-West Sydney to NSW 7,000
CBD Rail Link (AIS: A$7,000m)
Hobart: A World class, TAS 90
Livable, Waterfront City
Adaptable and Secure An Innovative Strategy for TAS 105
Water Supplies Tasmania: Focus on food bowl concept
Competitive International Eyre Peninsula Port Proposals SA tbc
Gateways
Port of Hastings VIC tbc
(incl. Peninsule Link rail freight corridor)
Port Hedland Inner Harbour WA 3,400
– Capacity Enhancements
Road and Rail Access and WA 756
Port Upgrades at Bunbury
Pilbara Cities WA 2,900
National Freight Network Australian Digital Train 20
Control System (ARA)
Mount Isa – Townsville Rail QLD 788
Corridor Upgrade
Bruce Highway Corridor Upgrades QLD n/a
Transcontinental Rail Link – VIC 400
Mildura to Menindee
Total ‘Early Stage’ Capital Expenditure 19,634
Real Potential Transforming our cities Brisbane Inner City Rail Capacity Upgrade QLD 14,000
Melbourne Metro Stage 2 VIC tbc
Managed Motorway Proposals NSW, 3,200
VIC SA, WA
Integrating Sydney’s Motorway NSW n/a
Network
Moreton Bay Rail Link QLD 1,100
Darra-Spring?eld Rail and Road project QLD 2,400
Adaptable and Secure Water Security Program ACT 551
Water Supplies
Tasmanian Water and Sewerage Reform TAS 1,000
A True National Energy Market Smart Grid Demonstration Pilot Project ACT 150
Installation of Low Flow Bypasses SA 47
in the Mount Lofty Ranges
Australia’s Banking Industry > 69
Development Project Project Estimated
Category Area Name State Cost (A$m)
Heywood Interconnector Upgrade SA 80
Mid-West Energy – Stage 2 WA 795
Competitive International Abbot Point Multi Purpose Harbour QLD 2,890
Gateways
Bell Bay Intermodal Expansion Project TAS 150
Smart Port ICT VIC 16
Melbourne International Freight Terminal VIC 260
Gateway WA – Perth Airport and Freight Access WA 600
Road Freight Access to Port NSW 4,000
Botany and Kingsford Smith Airport – M5 East
Road Freight Access to Port of QLD 934
Brisbane and Brisbane Airport – Port of Brisbane Motorway Upgrade
Road Freight Access to Port of Melbourne – Westlink VIC 5,000
Freight Access to Port of Adelaide SA 1,120
– Northern Connector
National Freight Network East West Rail Freight Corridor (ARTC) n/a
North South Rail Freight Corridors NSW n/a
Eastern Gold?elds Railway – 75
Freight Gateway Upgrade (WNR)
Advanced Train Management System (ARTC) 500
Western Interstate Freight Terminal VIC 2,314
Green Triangle Freight Transport Project SA/VIC 340
Total ‘Real Potential’ Capital Expenditure 41,522
Threshold Transforming our cities South West Rail Link NSW 2,400
Eastern Busway (Stages 2b and 3) QLD 825
Managed Motorways Proposals – SE Qld QLD 782
Northern Link Road Tunnel QLD 1,780
Competitive International Oakajee Port (potential equity injection) WA 4,000
Gateways
Darwin Port Expansion (potential equity injection) NT 336
Moorebank Intermodal Terminal NSW tbc
Total ‘Threshold’ Capital Expenditure 10,123
Ready to Proceed Transforming our cities Melbourne Metro Stage 1 VIC 4,900
Integrated Transit Corridor VIC 28
Development – Route 86 Demonstration, Project
National Freight Network Adelaide Rail Freight – Goodwood SA 418
and Torrens Junction
Federal Highway Link to Monaro ACT 220
Highway – Majura Parkway
Paci?c Highway Corridor Upgrades NSW 6,000
A National Broadband Network National Broadband Network (NBN)
Total ‘Threshold’ Capital Expenditure 11,566
TOTAL ESTIMATED INFRASTRUCTURE PRIORITY PIPELINE CAPITAL COSTS 82,845
Abbreviations: Australasian Railways Association (ARA), Australian Rail Track Corporation (ARTC), West Net Rail (WNR) .
Source: Infrastructure Australia, ‘Getting the fundamentals right for Australia’s infrastructure priorities’, June 2010.
70 > Australian Trade Commission Australia’s Banking Industry > 71
International demand for Australian natural resources has grown signi?cantly over the past decade and the local industry has
responded through increased production capacity. Much of this has depended on expanding infrastructure along the supply
chain – like railways, ports and pipelines – to transport increased mining volumes to market. Large capital projects
in infrastructure and production facilities can be seen in the doubling of annual capital expenditure from A$10 billion to
A$19.9 billion in the ?ve years to October 2010.
66
Currently, there are 72 projects with forecast capital expenditure of A$132.9 billion at an advanced stage (projects ‘committed’
or ‘under construction’) of development – the equivalent of 12 per cent of Australian GDP. These projects are spread across
commodities and states, although concentrated by value in petroleum (66 per cent), iron ore (13 per cent) and coal (4 per
cent). Western Australia represents 70 per cent of these projects, followed by Queensland (21 per cent) and New South Wales
(5 per cent).

There are currently sixteen projects committed or under construction that exceed A$1 billion in capital cost, with six projects
costing in-excess of A$5 billion.

Appendix G –
Capital Expenditure in Australia’s Mining Sector
66. ABARE-BRS, Minerals and energy major development projects report, October 2010.
Committed projects, October 2010
No. Cost No. Cost No. Cost No. Cost No. Cost
State (A$m) (A$m) (A$m) (A$m) (A$m)
New South Wales 7 3,194 2 2,050 4 1,715 0 0 13 6,959
Victoria 2 2,611 1 44 1 45 1 65 5 2,765
Queensland 6 19,711 5 1,990 6 3,343 3 2,797 20 27,841
Western Australia 7 65,447 15 19,237 4 5,922 1 2,444 27 93,050
South Australia 1 138 2 242 0 0 0 0 3 380
Tasmania 1 345 0 0 0 0 1 150 2 495
Northern Territory 2 1,444 0 0 0 0 0 0 2 1,444
Australia 26 92,890 25 23,563 15 11,025 6 5,456 72 132,934
Energy
projects
Mineral
projects
Infrastructure
Projects
Minerals and
Energy Processing

Total
Sources: ABARE, Minerals and energy Major development projects – October 2010
Australia’s Banking Industry > 71
Further, there are A$248.0 billion of less advanced projects (undergoing feasibility or pre-feasibility). The ?fteen largest of these
are estimated to cost in-excess of A$2 billion. The largest four projects are in the energy sector.
Infrastructure projects directly associated with the Minerals and Energy sector currently stand at 15 with an estimated cost
of A$11.0 billion in committed projects, and a further 31 valued at A$27.8 billion in less advanced projects. Committed
infrastructure projects include iron ore and coal ports, rail projects and gas pipelines. The largest committed projects include
the Cape Lambert A$3.4 billion port expansion in Karratha, W.A. and the A$1.1 billion Connyella to Abbot Point rail expansion
in Queensland. The largest of the less advanced infrastructure projects include the A$4.3 billion Oakajee Port Rail and the
A$2.1 billion Port Hedland projects.
Further information can be found at ABARE-BRS, ‘Minerals and energy major development projects report – October 2010’http://adl.brs.gov.au/data/warehouse/pe_abarebrs99001758/MEP_Oct2010_report.pdf
Capital Expenditure committed or under construction by inidvidual projects over A$5 billion
Expected Capital
Project Company
1
Location Startup Expenditure
2
Sectors
Gorgon LNG Chevron / Shell / ExxonMobil Barrow Island, WA 2015 $43b Petroleum
Queensland Curtis LNG project BG Group Gladstone, Qld 2014 US$15b (A$16.7b) Petroleum
(BG Group’s Share)
Pluto (train 1) Woodside Energy Carnarvon Basin/ 2011 $12.1b Petroleum
Burrup Peninsula, WA (inc site works for train 2)
Rapid Growth Project 5 (RGP5) BHP Billiton Pilbara, WA 2011 US$5.65b (A$6.3b) Iron Ore
incl. infrastructure)
NWS North Rankin B Woodside Energy/ 150 km NW of Dampier 2013 $5.1b (A$5.7b) Petroleum
BHP Billiton/BP/Chevron/ Carnarvon Basin, WA
Shell/Japan Australia LNG
Sino Iron Project CITIC Paci?c Mining Cape Preston, WA 2011 US$5.2b (A$5.8b) Iron Ore
1. Principal operating companies.
2. Total capital expenditure as reported by the company in current dollars. Includes cost of development, plant and equipment.
Sources: ABARE-BRS, Minerals and energy major development projects, October 2010
72 > Australian Trade Commission Australia’s Banking Industry > 73
Australia’s payments system represents a unique model of combined government and industry self-regulation.
Regulation
The Payments System Board (PSB) of the Reserve Bank of Australia oversees the payments system and is responsible for
promoting the safety and ef?ciency of the payments system. Through the Payment Systems (Regulation) Act 1998 and the
Payment Systems and Netting Act 1998, the Reserve Bank has a clear mandate to oversee the operation of the payments system.
The Australian Payments Clearing Association (APCA) is the Australian payments industry’s principal self-regulatory body.
It is the primary vehicle for payments industry collaboration with a mandate to manage and develop regulations, procedures,
policies, and standards governing payments clearing and settlement within Australia.
Payments System Access Points
The sophistication and competitive nature of Australia’s payments system is re?ected in the changing nature of access points
to the system. Access to the payments system comes from bank and non-bank (credit union and building society) branches,
Bank@Post,
67
ATMs and EFTPOS terminals.
As at June 2010, banks operated out of 5,544 branches while non-bank branches numbered 1,167.
68
While bank branches
have been steadily increasing since 2001, non-bank branches have shown a slow decline over the past few years.
ATM and EFTPOS terminal numbers grew signi?cantly over the decade to June 2010, with ATM numbers tripling to 28,764 and
EFTPOS terminals more than doubling to 712,434.
69

Cash Payments
Cash remains the most important payment instrument for small retail transactions and accounts for the highest volume of
transactions. Automated Teller Machines (ATMs) have facilitated the use of cash by making it more readily available. In 2009,
monthly withdraws from ATMs averaged A$12.6 billion,
70
or approximately A$575 per person.
Non-cash Payments
Non-cash payments account for most of the value of payments in the Australian economy. It is estimated that approximately
A$220
71
billion of non-cash payments are made each business day, equivalent to 20 per cent of GDP.
Approximately three-quarters of the value of non-cash transactions are high-value business transactions, which are processed
through Australia’s real-time gross settlement (RTGS) system.
The use of debit cards has also grown signi?cantly in recent years. As at 31 August 2010, there were 32.1 million bank
accounts that could be accessed by a debit card, and these cards processed some 197 million transactions (purchases and
cash-outs) during the month with a total value of A$13 billion.
72

Australia was ranked one of the Top Ten in the world in the Economic Intelligence Unit’s Digital Economy Rankings 2010. Australia
is a very sophisticated market where ICT companies can successfully develop solutions with global applicability. The country is also
the source of a number of distinctive technologies – especially in the areas of e-?nance, e-health, and e-government.

Appendix H – Transaction Services –
Payments System
67. Bank@Post’ (formerly giroPost) provides a limited range of ?nancial services at certain Australia Post of?ces on behalf of member ?nancial institutions. In June 2010,
member institutions comprised Adelaide Bank, Bank of Queensland, BankWest, Bendigo Bank, Citibank, Commonwealth Bank, HSBC Bank Australia, ING Direct, Members
Equity, National Australia Bank, St. George Bank, B&E Ltd, GE Capital Finance Australia, Heritage Building Society, IMB Ltd, Maitland Mutual Building Society, RAMS Home
Loans, Wide Bay Australia Ltd and 56 credit unions.http://www.rba.gov.au/statistics/tables/xls/c08hist.xls
68. RBA website,http://www.rba.gov.au/statistics/tables/xls/c08hist.xls
69. RBA websitehttp://www.rba.gov.au/statistics/tables/xls/c08hist.xls
70. RBA website,http://www.rba.gov.au/payments-system/about.html
71. RBA website,http://www.rba.gov.au/payments-system/about.html
72. RBA website,http://www.rba.gov.au/statistics/tables/xls/c05hist.xls
Australia’s Banking Industry > 73
Payment Settlements
Arrangements for clearing most payment instruments – cheques, direct entry payments, ATMs, EFTPOS and high-value
payments – are coordinated by the Australian Payments Clearing Association (APCA), which is a private company owned
by banks, building societies and credit unions. Scheme credit and debit cards (MasterCard and Visa) and BPAY are cleared
independent of APCA. APCA administers ?ve payments clearing systems covering cheques, direct debit and direct credit
payments, EFTPOS and ATMs, high value and bulk cash, and the COIN Infrastructure System.
Final settlement of obligations between payments providers is undertaken by entries to the providers Exchange Settlement
(ES) accounts at the Reserve Bank. Large-value payments are settled one-by-one on a real-time gross settlement (RTGS)
basis, while retail payments are settled as a batch on a deferred net settlement basis.
BPAY
Launched in 1997, BPAY was a world ?rst single bill payment system that was adopted across the banking sector. Its
objectives were to provide a convenient and secure way for consumers to pay bills and a more ef?cient collection service
for billers and ?nancial institutions. More than 170 Australian ?nancial institutions (Authorised Deposit-taking institutions
under the Banking Act), covering approximately 90 per cent of the consumer banking market, belong to the scheme.
There are more than 18,000 biller codes that accept BPAY and each month 25.7 million bills worth A$19.2 billion are paid
using BPAY. More information on BPAY is available at www.bpay.com.au.
Future Trends
In December 2008, APCA released its vision for the evolution of Australia’s electronic payments systems, entitled ‘Low Value
Payments: An Australian Roadmap’. The report was based on extensive consultations with industry and lays out a high level
vision for low value payments in Australia for 2018. The roadmap focuses on cheque and direct entry systems and sets out a
series of industry initiatives, including new connectivity of applications to international standards and standard messaging.
73

In May 2010, the Payments System Board announced a strategic review of innovation in the Australian payments system. The
objective is to identify areas in which innovation in the Australian payments system could be improved through more effective
co-operation between stakeholders and regulators. The Board anticipates ?nalising its conclusions by the end of 2011.
New Technologies
Mobile Banking/Payments
Mobile payments (which include SMS-based stored value services, top ups of mobile accounts and phone bill charges) are
at an early stage of adoption in Australia. Most mobile payments are for phone-related products (such as ringtones) or are
internet banking payments initiated on a smartphone.
Stored Value Cards
Stored value cards (also known as rechargeable stored value, smart cards or electronic purses) are cards which store
‘rechargeable’ value. Such cards come with various characteristics and degrees of sophistication and are being used in
Australia primarily in the form of gift cards, telephone cards, and public transport. Take-up of these cards and other SMART
card type applications in Australia has been less than in other countries such as the United States.
A recent entrant to the Electronic Funds Transfer at Point of Sales (EFTPOS) system is Tyro. Tyro provides an internet based
EFTPOS solution for credit, debit and gift card transactions on behalf of Australian merchants.
Touch and Go
Touch and Go technology (MasterCard Paypass and Visa Paywave) has recently appeared in the Australian market; it allows
for the rapid payment of goods and services by simply touching the card against the terminal. A special chip in the debit card
is detected by the terminal. It is limited to transactions with a value below $100. While the lack of veri?cation has created
concerns about security, the Commonwealth Bank has reported that 25 per cent of eligible transactions at its 15,000 terminals
are now processed using this technology.
73. APCA, Low Value Payments: An Australian Roadmap, December 2008.

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