Banking of Australia

Banking in Australia is dominated by four major banks: Commonwealth Bank of Australia, Westpac Banking Corporation, Australia and New Zealand Banking Group, and National Australia Bank. There are several smaller banks with a presence throughout the country, and a large number of other financial institutions, such as credit unions, building societies and mutual banks, which provide limited banking-type services and are described as authorised deposit-taking Institutions. Many large foreign banks have a presence, but few have a retail banking presence. The central bank is the Reserve Bank of Australia (RBA). Since 2008 the Australian government has guaranteed deposits up to $250,000 per customer per institution against banking failure.

Banks require a bank licence under the Banking Act 1959. Foreign banks require a licence to operate through a branch in Australia, and Australian-incorporated foreign bank subsidiaries.

The banking system is liquid, competitive and well developed. For the 10 years ended mid-2013, the Commonwealth Bank was ranked first in Bloomberg Riskless Return Ranking a risk-adjusted 18%. Westpac Bank was in fourth place with 11% and ANZ Bank was in seventh place with 8.7%.

Between white settlement in Sydney in 1788 and 1817, there were no banks nor much currency in the colony. The first bank in Australia was the Bank of New South Wales, established in Sydney in 1817. During the 19th and early 20th century, the Bank of New South Wales opened branches throughout Australia and Oceania: at Moreton Bay (Brisbane) (in 1850), then in Victoria (1851), New Zealand (1861), South Australia (1877), Western Australia (1883), Fiji (1901), Papua (now part of Papua New Guinea) (1910) and Tasmania (1910). The Commercial Banking Company of Sydney was established in 1834, and the National Bank of Australasia establish in 1858, and set up branches in other Australian colonies: Tasmania (in 1859), Western Australia (1866), New South Wales (1885) and Queensland (1920), and a London branch (1864). After acquiring a number of other banks over the years, these two banks merged in 1982 to form the National Commercial Banking Corporation of Australia, which was renamed the National Australia Bank.

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