Australia China - Beyond Tomorrow

Banking & Finance

Australian strength IN FINANCE

Australia’s financial sector is the largest contributor to Australia’s national output, employment and economic growth. At the core of the economic system, the sector contributes as much as the mining and agriculture sectors combined. The strength of Australia’s financial system, particularly the banking sector, has been an important factor in cushioning Australia from the impact of the Global Financial Crisis. In 2010, the sector generated 10.8 per cent or A$121 billion of real gross value added. Over the past decade, the sector has grown by an average of 4.3 per cent a year – significantly above the average for all sectors (3.5 per cent). Australia’s four major banks are all among the nine AA-rated banks worldwide. Since the Government decided to

deregulate the banking sector in the 1980s, there has been a significant influx of foreign bank competitors. Of the Forbes top 25 banking institutions, 21 have a presence in Australia. China’s five largest banks, Industrial and Commercial Bank of China, China Construction Bank, Bank of China, Agricultural Bank of China, and Bank of Communications, also have presence in Australia. Australia’s financial service

companies now have a truly global footprint. Australia has the largest investment fund assets pool in Asia

and the fourth largest in the world. It has become a major finance market player in the Asia-Pacific region, due to the liquidity and strength of Australia’s assets pool, best practice regulatory systems and reputation in areas such as investment banking, funds management and property and infrastructure funds. To ensure the sector’s continuing dynamism and expansion, which elevates the global recognition of Australia’s strong and sound regulatory infrastructure and world- class supervision, a number of initiatives were implemented by the Australian government. This included commissioning a report by the Australian Financial Centre Forum to recommend further steps to promote Australia as a financial services centre. In May 2010, the Government

released its response to the report of the Australian Financial Centre Forum, which provides in-principle or direct support for 18 of the 19 recommendations in the report. These recommendations include: “ the introduction of an Investment Manager Regime to provide greater certainty around the tax treatment of foreign funds managed by Australian investment managers;

“ the development of an Asia Region Funds Passport, which would create a regional funds

management platform that provides greater market access for funds managers in the Passport states of the region;

“ phasing down the Interest Withholding Tax (IWT) incurred by local subsidiaries and branches when they pay interest on borrowings from their overseas parents, which will both boost Australia’s attractiveness as a financial centre and potentially enhance banking competition;

“ the development of a central regulatory online gateway that assists potential market entrants to navigate the Australian regulatory system. Many foreign banks view Australia

as a first point of entry into the fastest growing region in the world, with around 60 per cent of the global population. Consequently, Australia’s domestic banks are increasingly seeking to leverage their strong Australian base and innovative product offering, advanced capital management and sophisticated product distribution and risk management systems to expand within the region and beyond. 

“Australia’s four major banks are all among the nine AA-rated banks worldwide”

The Australian Trade Commission – Austrade – is the Australian government’s trade and investment development agency, operating in more than 100 locations in over 55 countries. Austrade provides a range of services to investors, including information about local market conditions and regulations. Austrade has a financial services mandate and a dedicated financial services team in Sydney.

See www.austrade.gov.au/invest or email invest@austrade.gov.au

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AUSTRALIA

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