Find Banking and Financial Services expertise in Australia
Australia’s financial sector is mature and strong, having enjoyed sustained favourable macroeconomic conditions for most of the 2000s. The banking system, which holds approximately half of total financial systems assets, is sound, with high earnings, strong asset growth and low levels of problem assets (2011). The financial sector provides the nation’s largest industry sector by capitalisation, consisting of trading and investment banks, asset managers, insurance companies, real estate investment trusts (REITs) and other providers of financial services. The sector is the greatest contributor to Australia’s national output, generating over 10% of Australian output or A$135 billion of real gross value added in 2010. As a result of compulsory superannuation Australia possessed in 2011 the 4th largest pension fund pool in the world, forming a favourable environment for banks, asset management, financial planning and insurance companies. The nation’s largest banks are the National Australia Bank, Commonwealth, ANZ Banking, Westpac and Macquarie Bank.
Regulation of Financial Services
The Australian banking sector is regulated by the Australian Prudential Regulation Authority (APRA), which oversees banks, credit unions, building societies, general insurance and reinsurance companies, life insurance, friendly societies, and most members of the superannuation industry. It creates and enforces the rules governing the capital adequacy of Australian banks. As a response to the global financial crisis, both markets and regulators were prompted to reconsider the perspectives on acceptable levels and forms of capital. In 2010 a number of major changes to existing capital regulations were proposed by national and international regulatory bodies. The Reserve Bank of Australia, Australia’s Central Bank, conducts monetary policy, aims at maintaining a strong financial system, issues the nation’s currency and manages Australia’s gold and foreign exchange reserves. In addition it provides certain banking and registry services to a range of Australian government agencies and to a number of overseas central banks and official institutions. The strength of the sector was reflected in Australia’s 5th place ranking for the soundness of its banks in the World Economic Forum’s Global Competitiveness Report (2012-13).
Development of Financial Services
In the World Bank Ease of Doing Business Index (2011) Australia was placed 8th in the world (out of 183 countries) for getting credit, a very strong position coming below only the United Kingdom, the United States and New Zealand in relation to other high income nations. In terms of protecting investors it was placed 65th. In the World Economic Forum’s Global Competitiveness Report (2012-13) it was placed 19th in the world (out of 144 countries) for its availability of financial services, whilst the affordability of services was rated 36th, finding itself above New Zealand in availability but below its neighbour when it comes to affordability. For ease of access to loans it was ranked 23rd, three places below the United States. For financing through local equity market it ranked a prominent 13th place, above the United States and New Zealand.