Banking in Australia

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Banking in Australia is dominated by four major banks: Commonwealth Bank, Westpac, Australia & New Zealand Banking Group and National Australia Bank. There are several smaller banks with a presence throughout the country which includes Bendigo and Adelaide Bank, Suncorp Bank,^[1] 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 (ADIs). Many large foreign banks have a presence, but few have a retail banking presence. The central bank is the Reserve Bank of Australia (RBA). The Australian government’s Financial Claims Scheme guarantees deposits up to $250,000 per account-holder per ADI in the event of the ADI failing.^[2]

Banks require a bank licence under the Banking Act 1959. Foreign banks require a licence to operate through a branch in Australia, as do Australian-incorporated foreign bank subsidiaries. Complying religious charitable development funds are exempt from the banking licence requirement.^[3]

Australia has a sophisticated, competitive and profitable financial sector and a strong regulatory system.^[4] 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%.^[5] The four major banks are among the world's largest banks by market capitalisation and all rank in the top 25 globally for safest banks. They are also some of the most profitable in the world.^[4] Australia's financial services sector is the largest contributor to the national economy, contributing around $140 billion to GDP a year. It is a major driver of economic growth and employs 450,000 people.^[4]